Sitka Assembly Reviews FY2025 Enterprise Fund Budgets and Rate Increases - February 29, 2024
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Sitka Assembly Reviews FY2025 Enterprise Fund Budgets and Rate Increases - February 29, 2024
The Sitka City and Borough Assembly held a special meeting on February 29, 2024, focused on preliminary discussions and direction for the FY2025 municipal budget, particularly the enterprise funds. Finance Director Melissa Haley presented rate recommendations for electric, water, wastewater, solid waste, and harbor funds, along with proposed new full-time equivalent (FTE) positions. The assembly also discussed the general fund budget, surplus goals, and potential changes to school funding.
Discussion Items
- Electric Fund: The assembly considered a proposal to forgo a consumption rate increase (0%) while increasing the base customer fee for the first time since 2016, based on a cost-of-service study conducted by consultants. The proposed changes would raise residential base fees by $8.64 annually over three years, with larger increases for large commercial, public authority, and interruptible services. The fund benefits from a $2 million federal grant that allowed the zero-consumption increase. Assembly members discussed the equitable impact on low-income households and the long-term benefit of stabilizing revenue.
- Water Fund: Presented as one of the more challenging funds, with debt growing and working capital declining. A 4% rate increase was recommended (up from the previously planned 3%), driven by increased operating costs from the new filtration plant and future capital needs. An FTE position for water operations was requested to handle the additional workload; the position is intended to be permanent, partly to prepare for upcoming retirements.
- Wastewater Fund: The fund faces significant capital needs, including an unfunded mandate for secondary treatment. The administration recommended a 7.5% rate increase, but several assembly members (led by Deputy Mayor Mosher) argued for an 8.25% increase, noting the fund's poor health and risk of insolvency. The difference would cost the average residential customer an additional $0.50 per month. Consensus favored 8.25%.
- Solid Waste Fund: A 4% increase was recommended, driven primarily by operating costs. The assembly also discussed a potential fee for business waste oil pickup to cover service costs, with caution about setting fees too high to avoid illegal dumping.
- Harbor Fund: A 4% increase was recommended, supported by the Port and Harbor Commission. A new FTE maintenance position was requested to address a backlog of repairs and extend the life of harbor assets. Assembly members expressed strong support, noting that better maintenance could offset future large replacement projects.
- General Fund & Budget Philosophy: Assembly member Pike advocated for a surplus budget of approximately $1 million to prepare for future lean years. The administration noted that the draft general fund budget is currently in deficit and will require further review. Discussions also touched on potential changes to funding for the Sitka Historical Society (possibly from the Visitor Enhancement Fund) and the school district's Base Student Allocation, which could increase the city's cap by $400,000 at a $680 BSA increase.
Key Outcomes
- Consensus on Rate Increases: The assembly directed staff to develop enterprise fund budgets with the following rate increases: electric fund – 0% consumption increase with base fee adjustments; water fund – 4%; wastewater fund – 8.25% (over the administration's recommended 7.5%); solid waste fund – 4%; harbor fund – 4%.
- FTE Positions: The assembly expressed general support for both requested FTEs (water operations and harbor maintenance), with several members noting the long-term cost savings from improved maintenance and the need to address staffing gaps.
- Next Steps: The draft enterprise fund budgets, incorporating these rate directions, will be presented to the assembly by the end of March. The general fund budget will be released for review the following day.
- Adjournment: The meeting adjourned at 7:46 PM.
Meeting Transcript
Running a little late, so I'm gonna start the meeting for them. I'm gonna call to order. Let's stand up for a flag sloop. One nation under uh individual liberties and justice are all the assembly of the city and borough of Sitka would like to respectfully acknowledge the traditional first people of Shitka. With gratitude, we proceed on a roll call. See uh Mr. Mosher. Here, Mr. Pike. Here. Mr. Yestad. Here. Ms. Carlson. Here. Mr. Selene? Here. Um, Mayor Eisenbais is running a few minutes late, and Mr. Christensen is absent this evening. Okay. Thank you, sir. Okay. Is there any correspondence or agenda changes? Okay, seeing none. We'll go to persons to be heard. This is for public participation. And any item off the agenda. All public testimony is not to exceed three minutes for any individual. Public comments. Seeing none. Okay, we'll come back to the table. So now we're on to new business item A. Um the preliminary discussion direction for the fiscal year 2025 municipal budget with focus on the enterprise. So maybe action may be taken. So John, did you want or Melissa want to lead this? I'll give a really quick introduction and then turn it over to Melissa. Um we're wrapping up a draft of the uh general fund budget, and that should be coming your way here very soon to review. Uh but as that's getting done, uh, we're here to talk about the um uh enterprise funds. This is where we discuss the uh uh potential rate changes and uh show the impact of that for the assembly to consider. Um so Melissa's put together a pretty extensive presentation to walk through each one of those funds, and with that we'll turn it over and start. Okay, so um kind of our goals for tonight are really to walk through the process that we go through around rate setting and what um goals we have, um discuss some overall changes for each of these funds from last year and and any new challenges that these funds might be facing. Um just make sure that you guys are familiar with the assumptions behind the rate recommendations, and then ultimately what we really need out of this meeting is guidance on uh setting the rates for fiscal 25. So because we need those rates to set the revenue for all of our assembly or all of our enterprise funds that have uh rates. Um so some of the oh you know each fund has its own unique challenges, but some of the challenges that we're seeing that are impacting our funds across the board are inflation still, it's getting better, uh, but it's uh it you know, it's still high, particularly for uh construction and capital projects. Um our you know staffing continues to be a challenge. Uh defining our long-term capital needs this year. Uh we've made some really good progress on uh improving the uh data that we have for our capital plans. Uh really, we've been doing condition assessments and um just putting a lot of effort into planning.
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