Special Assembly Meeting on FY2025 Budget: April 18, 2024

The City and Borough Assembly held a special meeting on April 18, 2024, from 6:00 PM to 9:00 PM, to discuss and make decisions on the FY2025 Draft Administrator's Budget, focusing on Enterprise Funds, Internal Service Funds, Special Revenue Funds, and updates to the General Fund. The meeting resulted in several motions to adjust spending, bringing the General Fund from a projected $240,000 deficit to a $70,000 surplus, while also addressing school maintenance and tourism funding.

Consent Calendar

• No items were considered under the consent calendar.

Public Comments & Testimony

• Rachel Roy, Director of the Chamber and Visit Sitka, addressed the assembly remotely. She commended the assembly for its cohesive discussion and noted she had submitted a comprehensive budget proposal for Visit Sitka's contract, suggesting use of Commercial Passenger Vessel (CPV) funds based on precedent from Juneau. She offered to answer any questions via email before the next meeting.

Discussion Items

• Administrator's Opening Remarks: Municipal Administrator John Leach cautioned the assembly that ongoing debates about ballot initiatives to limit tourism could lead to costly legal challenges, potentially requiring reallocation from General Fund programs such as parks and recreation, the Blatchley Pool, Performing Arts Center funding, and paving projects.
• Finance Director's Presentation: Finance Director Melissa Haley reviewed budgets for enterprise funds (electric, water, wastewater, solid waste, harbor, airport, marine service center, Gary Paxton Industrial Park), internal service funds (IT, central garage, building maintenance), and special revenue funds. Highlights included:
  • Electric fund: No rate increase, but a multi-year customer fee increase; significant capital needs for diesel generation and hydropower.
  • Water fund: 4% rate increase, with debt service coming online for the critical secondary water project.
  • Wastewater fund: 8.25% rate increase to cover debt service and new disinfection requirements; seeking a $6 million DEC loan.
  • Solid waste fund: Working capital remains negative but improving due to compactor efficiencies.
  • Harbor fund: 4% rate increase; condition assessments helping extend asset life.
  • Visitor Enhancement Fund: Revenue from bed tax is contracting, with FY24 projections below FY23 actuals; only audit fees and travel currently budgeted.
• School Maintenance Discussion: Assembly members debated the city's takeover of school building maintenance, funded partly by the 1% seasonal sales tax (projected at ~$2.4 million annually). A $400,000 transfer from that fund to the General Fund was included, but members raised concerns about clarity of decision-making authority and the need to ensure the fund remains available for major capital projects. Administrator Leach noted the plan is still conceptual and an MOU with the school district is being developed.
• General Fund Deficit Resolution: The initial deficit of $240,000 was whitled down through several motions. Assembly member Ystad proposed cutting the grader V-plow and the Granite Creek security gate, while other members proposed cutting shipping containers and body cameras. The assembly also approved a motion to increase street striping and pothole repair funding by $100,000, funded from the Public Infrastructure Sinking Fund. A proposal to fund the Tourism Manager position 50% from CPV and 50% from the Visitor Enhancement Fund passed despite concerns from some members about limiting the position's flexibility and potential legal risk.

Key Outcomes

• Tourism Manager Funding (Motion Passed 5-2): Moved by Carlson, seconded by Ystad, to fund the Tourism Manager position using 50% from the Commercial Passenger Vessel Excise Tax Fund and 50% from the Visitor Activities Enhancement Fund. Yes: Christianson, Ystad, Mosher, Saline, Carlson. No: Eisenbeisz, Pike.
• Grader V-Plow Removal (Motion Passed 7-0): Moved by Ystad, seconded by Pike, to remove the resource proposal for the grader V-plow. All in favor.
• Granite Creek Security Gate Removal (Motion Passed 6-1): Moved by Ystad, seconded by Pike, to remove the resource proposal for the gate. No: Mosher.
• Shipping Containers Removal (Motion Passed 7-0): Moved by Eisenbeisz, seconded by Pike, to remove the resource proposal for two 40-foot shipping containers. All in favor.
• Body Cameras Removal (Motion Passed 5-2): Moved by Christianson, seconded by Carlson, to remove the resource proposal for body cameras. No: Mosher, Saline. Police Chief indicated he would seek grant opportunities for body cameras.
• Increased Street Contracted Services (Motion Passed 7-0): Moved by Eisenbeisz, seconded by Mosher, to increase the contracted services resource proposal for Streets Division from $350k to $450k (funded by an additional $100k from the Public Infrastructure Sinking Fund) for road striping and pothole repair. All in favor.
• No changes to school funding were made; the assembly opted to maintain the proposed $640,000 for school maintenance and operations.
• Budget Schedule: The budget will proceed to first reading on May 14 and second reading on May 28, with a finalized budget to be adopted by the end of the fiscal year.