Special Meeting on FY2026 Budget – January 9, 2025

The City and Borough of Sitka Assembly held a special meeting on Thursday, January 9, 2025, at 6:00 PM to begin the FY2026 General Fund budget process. Staff presented resource proposals for new initiatives and sought assembly guidance on the draft budget. Public comments addressed paving, street repairs, crosswalks, and fiscal conservatism. The assembly directed staff to prepare a conservative draft budget and to include most proposed items, with some flagged for later review.

Public Comments & Testimony

• Jeremy Twaddle, a lifelong Price Street resident, advocated for paving the remaining gravel portion of Price Street, citing 24.4 acres with 53 commercial/industrial lots, frequent maintenance costs, and health risks from silica dust. He argued the street is a prime candidate due to recent utility upgrades.
• Nicholas McGraw, a 46-year resident, commented on crosswalk safety near the assembly chambers, suggested temporary barriers, and proposed using cruise ship funding to run power to Old Sitka Dock to reduce emissions.
• Tyler Cropley, superintendent of Secon (a paving contractor), encouraged the city to develop an annual road maintenance program to enable competitive bids, referencing successful programs in Juneau and Ketchikan.
• Austin Cranford supported a fiscally conservative budget approach, noting macroeconomic risks (inverted yield curve, tariff concerns) and advising the assembly to monitor national economic indicators.
• Klaudia Leccese stressed the importance of a diverse economy beyond cruise tourism, noting that sales tax revenue is not directly correlated to cruise visitation, and urged thoughtful planning.

Discussion Items

• FY2026 Budget Process Overview: Municipal Administrator John Leach and Finance Director Melissa Haley outlined the compressed budget schedule. The zero-based budget process required resource proposals for any significant service-level changes. No new full-time equivalents (FTEs) were proposed except a 0.2 FTE for restructuring. Compensation study results and union contract renegotiations (all contracts expire June 30, 2025) are pending.
• Resource Proposals (Goal 1 – Quality of Life):
  • Increasing SAFE (domestic violence shelter) funding by $50,000 (from flat $50,000 to $100,000). Deputy Mayor Pike supported, citing cost savings to police and emergency services.
  • $50,000 for evaluating the Commercial Land Use Plan. Some assembly members questioned the need, given the plan was postponed for a year. Staff clarified the funds would allow additional analysis if needed. Consensus was to include it provisionally.
  • $50,000 increase to Southeast Economic Development Association (SEDA) for general economic development (total now $170,000, including $90,000 for GPIP operation).
• Resource Proposals (Goal 4 – Infrastructure):
  • Multiple vehicle replacements (city hall car, police cruiser, streets dump truck, school district maintenance vehicle) with partial sinking funds. Assembly discussed need to review sinking fund policies.
  • Athletic field revitalization ($50,000), interpretive sign replacement, scoreboard replacement, EV charging stations, HVAC controls at animal shelter, cross-trail drainage, Blatchley pool improvements, and $3 million for HVAC at the city-state building (police/court facility) — contingent on state cost-share. Assembly expressed concerns about the building’s long-term viability.
  • Other items: street improvements (downtown Lincoln Street, Katlian Street, Watchuset storm drain), ferry terminal pathway, and drone for fire department (not recommended due to insurance costs).
• Revenue Forecast and Budget Philosophy: Haley noted conservative revenue assumptions (at 2022 levels) due to a potential ballot measure that could reduce sales tax. Assembly members debated planning for worst-case vs. status quo. Consensus was to prepare a conservative budget using current revenue trends, with sensitivity analysis to show impacts of potential revenue declines. The assembly emphasized protecting core services and maintaining reserves.
• Other Discussions:
  • Price Street paving: Assembly noted it is not in the current capital plan (deferred). A Local Improvement District (LID) was suggested as a resident-driven option.
  • Safety training: Deputy Mayor Pike suggested additional resources; staff noted free training from Alaska Public Risk Alliance and existing online modules.
  • Street sign correction on Katlian Street.

Key Outcomes

• Consensus: The assembly directed staff to prepare the Administrator’s draft General Fund budget based on the resource proposals presented, with the understanding that some items (e.g., commercial land use plan funding) may be revisited.
• Budget Conservatism: Staff will build a conservative status quo budget, assuming no change in sales tax revenue from the pending ballot measure, but will provide sensitivity analysis showing bottom-line impacts if revenue drops by $1–2 million.
• Meeting Schedule: The January 30 meeting will be rescheduled to either February 4 or February 6, 2025.
• Next Steps: Staff will continue internal budget reviews; the draft budget will be sent to the assembly around February 7. A joint meeting with the school board on school funding is set for January 16.
• Adjournment: The meeting adjourned at 8:16 PM on a motion by Assembly member Mosher.