It’s beginning to look like Sitka will have a bit more money than it needs next year, but fewer employees.

When the Sitka Assembly met in a special budget meeting last week, it learned that – due to a combination of factors – it could enjoy a small surplus in the 2024 budget. But a staff shortage is reaching serious levels.

The City of Sitka’s General Fund budget is coming in at just over $46 million dollars for next year. This is the pot of money that pays for schools, police and fire, public works, administration, and capital projects.

Right now the budget is in draft form. There are line items for everything from a sizable increase in sales tax revenue from cruise tourism, to a dip in federal aid from the peak COVID years. And there are still some big questions that could shake things up: National economic uncertainty, whether the city can score some more cash from the recent influx of federal infrastructure funds, and whether the state government will raise the base student allocation, providing more funding for Sitka’s schools.

As it stands now, the budget would leave the city with a small surplus of around $18,000.

But some assembly members were concerned nevertheless – about staffing. City Finance Officer Melissa Haley said her budget planned for a 3 percent vacancy rate. But right now, around 13 percent of city staff positions are vacant. Mayor Steven Eisenbeisz said the vacancies worried him, and he wanted the assembly to start considering solutions.

“Is it going to be our capital projects? Or is it going to be our staffing?” Eisenbeisz asked about the assembly’s priorities. “Because, yes, I want the potholes fixed. Yes, I want to put some money into that. But if we don’t have the guy to go out and fix the potholes, I don’t care how much hot tar we have, it’s not going to happen.” 

Assembly member Thor Christianson agreed, and brainstormed a possible approach to the problem –using the surplus for bonuses. 

“Because of the very conservative estimates on revenues…maybe we we look at something like [bonuses] if we have a surplus of more than $17,000 at the end of the year, which I think it’s probably a pretty good likelihood that we do” Christianson said. “We set up some sort of a formula for that. I’m not sure that that’s the “end-all problems,” but it would at least give people something to look forward to.”

Kevin Mosher noted that all of the city’s union contracts were recently renegotiated with three-year terms, and any big changes for union members would require reopening the contracts. He said if the assembly was going to consider wage increases, he’d prefer bonuses over adjusting salaries. 

“Because once you increase the person’s standard wages, [it’s] very hard to take it back, almost impossible,” Mosher said. “I’m okay with conversation, and with going forward, I just don’t want to…get the idea or the thought out there that we’re just going to start throwing money out there or increase it substantially anytime soon,” he added. “It is very complicated and needs to be done very thoughtfully and carefully.”

The assembly didn’t make any decisions about bonuses that night. But at its last regular meeting, the assembly approved, on first reading, funding for a wage study. Valarie Ruff is the city’s Human Resources Director – she told the assembly that the study would look beyond cash compensation.

“How do we use variable compensation? How do we use incentives?” Ruff said. “Housing is a huge problem for us right now in recruiting. So how do we put all of those things together so that we can offer packages that are attractive to everyone? So when I say “variable compensation,” it can mean bonuses, it may mean an extra day of annual leave. There are so many things that we could do with variable compensation to offset wages…wages isn’t always what we focus on.”

But before that study can kick off, the assembly must approve it on a final reading. Municipal Administrator John Leach said a wage study, on the fastest timeline, would take at least 6 or 7 months.