It’s January, and you know what that means — municipal budget season has begun. On Tuesday (1-11-22), the Sitka Assembly heard a ‘big picture’ presentation from the city’s finance department about the state of the budget. And while city staff say Sitka is poised to continue an economic recovery from the coronavirus pandemic in Fiscal Year ’23, they also expect some challenges and unknowns.
In the first work session of 2022, city finance director Melissa Haley told the Assembly that things were starting to look a little brighter on the city’s budget front.
“We’re going from the really significant impacts of the pandemic to a recovery,” Haley said. While the city isn’t financially ‘whole’ yet, Haley said some numbers have started to look more typical over the last year – particularly the city’s main source of income, sales tax returns.
“Our pre-pandemic levels were close to $5.3 million, and we are at $5.1 million for the third quarter,” Haley told Assembly members. “So you know, that’s pretty impressive considering that our cruise season was very abbreviated last year.”
But predicting how much revenue the city will bring in for Fiscal Year 23 isn’t that easy. Haley said while the city is in recovery, there are still uncertainties – like how much money will Sitka score from the recent federal infrastructure bill? And will the community really see 480,000 cruise passengers this summer?
“Right now we’re hearing in the news every day that cruise ships are being significantly impacted by outbreaks,” she said. “On the ships, we don’t know what our cruise season is going to look like.”
“I would say that right now, what we have proposed here, it’s optimistic as in…we think the recovery is going to continue. But it’s conservative at the same time,” Haley continued. “This budget does not assume a windfall that cruise passengers flood downtown and buy everything out.”
City staff are also concerned with rising costs– the city has a long list of projects to complete, many to repair or replace aging infrastructure. With inflation at historic levels, nationally, the budgets for those projects will rise.
“So just doing what we do now, without a doubt is going to cost more next year,” Haley said. “It’s already costing us more. We’re also seeing related supply chain issues that that mean that we might not be able to get what we need to get to keep doing what we do. So there’s going to be challenges there, or to get it, we’re going to have to really spend a lot more.”
And the city has its employees to think about too- all of the city’s labor union contracts are up for renegotiation this year. The city employs around 150 people- 107 are union employees. Haley said those negotiations are coming at a time when the city has, like the rest of the country, struggled with staff retention and high turnover.
Since it was just a work session, the Assembly didn’t make any budget decisions on Tuesday, but the group will meet several times over the next few months to go over different aspects of the city’s budget in greater detail. It will hold its first special budget meeting on January 27 at 6 p.m.