The Sitka Assembly has trimmed next year’s proposed budget, and more cuts are coming. The assembly spent around three hours in a special meeting last week, making cuts to reduce an $883,250 budget deficit by more than half.
City staff project the city’s general fund will bring in around $45 million in revenue in Fiscal Year 27, which begins on July 1. Finance Director Brooke Volschenk said property tax revenue is up, but sales tax, which makes up a large portion of the city’s revenue, dropped in the fourth quarter of last year by seven percent and has generally flattened.
“So it’s not enough to be fully alarmed about, especially because there’s been a government shutdown, there’s been some uncertainty that may have impacted spending decisions that people were making,” she said. “But it is something to keep an eye on, if this is reflective of a longer-term trend that we’re going to see.”
On the expenses side, Volschenk noted a possible increase in health insurance costs, increases to personnel costs from last year’s negotiated union contracts, and funding to the cap for schools, plus 100 percent of what the city ultimately receives for Secure Rural Schools- that’s federal funding for schools surrounded by federal lands that don’t contribute to the local tax base.
Volschenk said if the city budgets to maintain the current level of government services, the city would start next fiscal year with a deficit of nearly $900,000. Municipal Administrator John Leach said staff had identified some options for balancing the budget.
“So we obviously don’t want to come in here and say, here’s a $900,000 deficit. Figure it out,” Leach said. “We’ve got some options that have been put together, and I just want to throw these out there to stir some discussion, and I know there will need to be some tough decisions made.”
Leach suggested two possible cuts– he first suggested tackling the “resource proposal” list. These are requests for new positions or equipment city department heads submit during the budget process. The other option Leach suggested was reconsidering part of the city’s contribution to the Sitka School District, by reverting to the traditional 50/50 split of the Secure Rural Schools Funding to trim the deficit.
The assembly leaned into the resource proposals first. After much discussion, the group cut several items from the list, including the purchase of two patrol cars for the police department, and $250,000 for athletic field sand. Overall, the group trimmed the deficit from the draft general fund budget by more than half, and directed the municipal administrator to identify other cuts that could bridge the remaining budget gap.
Setting aside the question of Secure Rural Schools funding, and even with city funding schools to the cap, or maximum allowed by state law, the Sitka School District’s budget is in a tight spot. At a School Board work session earlier in the week, the board considered three possible scenarios for trimming its own projected budget deficit for next school year. School Board President Phil Burdick told the assembly all of those scenarios included staff cuts.
“So you know it’s it’s dire, and it’s not your fault. Let’s just put it that way. We’re looking at 11-and-a-half staff reductions, even in the best case scenario, that’s just teachers. We’re also looking at one-and-a-half administrators. Not rehiring positions, that’s included in that. The one full time counselor position that we’ll fund with grant funds, reduction of classified staff,” Burdick said. “Basically, we’re cutting in every area no matter, no matter which scenario we look at.”
The Sitka School Board will hold a public budget hearing on April 1 beginning at 5 p.m. in the Sitka High School library, before its regular meeting. The Sitka Assembly will hold several more special budget meetings next month before it finalizes the budget in May.
