OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Valdez City Council 2026 Budget Overview Work Session – October 2, 2025

Meeting PortalThursday, October 2, 2025
BodyValdez, Alaska
SessionMeeting Portal
DateThursday, October 2, 2025
StatusFILED
Video Record

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Transcript — Verbatim
0:01

Okay, we'll go ahead and get this uh work session uh going.

0:04

This will be a series of work sessions for the uh budget for the 2025 uh season or 2026 season.

0:11

Um so uh go ahead, Jordan, take it away.

0:15

Thank you so much, Mayor.

0:16

Welcome everyone to the first work session of the 2026 budget season.

0:24

We are uh we have uh the same number of workshops as we've always had in the past, however, we're gonna set this overview one right at the beginning here on October 2nd.

0:36

We finished city manager review of the budget as quickly as last Wednesday.

0:42

So I apologize for some of the uh hectic slides out to you and then revised slides today.

0:52

Uh, but the idea and the purpose behind the slides that you have in your possession are for them to sit and marinate and generate questions for you throughout the budget process.

1:03

Not necessarily tonight, though.

1:05

If you do have questions tonight, feel free to just stop me in the middle of it, and uh we can work through anything that you need to tonight.

1:13

There are very few actual appropriations that we're gonna touch on tonight.

1:18

The the main real debate around level of appropriation is simply revenues and some reserve funds, not all of them.

1:28

So uh this is this is again mostly for information, though I hope that it generates some questions, and I hope you have them, and feel free to pepper me throughout the presentation.

1:40

With that, the agenda for tonight, we're gonna start with budget process, just take you through what the budget looks like throughout the year.

1:48

I'm gonna take you through the financial schedule, which is my favorite thing, the fund balance, and uh that's not anything new to you folks, but I'd like to.

2:00

I just like to touch on that in the overview every year.

2:02

That's the highest level of any organization is how much you have in fund balance or net position.

2:09

Then you have the lines, and the lines is something that we've been doing now for for many years, and the lines sometimes go up, sometimes go down, uh, but they always cross.

2:23

That's the punchline there.

2:25

And we'll get to we'll get to those here in a minute.

2:28

Budget parameters, that is something that's been new in the last three or four years where we do a budget parameters resolution.

2:35

I'm gonna take you through that.

2:37

The budget parameters resolution is a way for you.

2:40

You already know this, but a way for you to communicate to staff and city manager and management what you'd like the city budget to look like.

2:46

And so we're gonna go through some of the high points on the budget parameters resolution, the things that management heard and attempted to incorporate in this 2026 budget.

2:57

And then we are going to do some appropriations on revenues and reserve funds, and we're gonna do a special presentation tonight on the utility fund and the special revenue fund there.

3:07

That was asked for during department operations reports.

3:09

We've got some updated numbers for you.

3:11

I'll turn it over to Casey at that point.

3:13

And way at the end, not listed here, but if there is time, time permitting, there's some personnel discussion.

3:18

City manager has a few slides towards the end.

3:22

So with that, start with budget process with the C line.

3:29

This is the first workshop.

3:31

Then we have CSOs next Thursday, and what I like to call focus week.

3:36

Four workshops in a row starting on Monday.

3:39

That Monday, October 7th, 27th workshop, rather, is uh at the Civic Center.

3:44

The rest everything else is gonna be in council chambers.

3:48

There's some nice footnotes in the schedule that we passed out that uh that you'll be able to read as well.

3:56

And one thing I want to point out on the budget process is that it doesn't all all start on October 2nd.

4:03

The budget process goes on all year long, and we are just simply in quarter four.

4:11

So leave that, and we're gonna jump into the financial schedule.

4:17

It often puts me to sleep, sometimes going through all those rows and columns, and so I have an otter sleeping.

4:24

Uh but it's uh it's the control tower of the entire budget.

4:31

This is the best way to get an idea of what city what is happening with city operations.

4:37

So for for now, let's ignore all the numbers because they're hard to see.

4:40

This picture is zoomed out quite a bit.

4:44

The graphics down in the bottom are are what I want to draw your eyes to.

4:47

So down on the bottom, bottom left, you can see that general fund revenues exceed general fund expenses, and the difference between other fund expenses and other fund revenues is exactly the same as that gap between the general fund, and that's by design.

5:00

And the difference between other fund expenses and other fund revenues is exactly the same as that gap between the general fund.

5:04

And that's by design.

5:06

Any excess revenue is transferred to the other funds for service delivery.

5:12

And it breaks out the other funds on the bottom right.

5:18

And pretty obvious permanent fund is all revenue, very little expense, debt service by nature.

5:24

It's gonna be mostly expense and very little revenue.

5:35

Used to be a program, state school bond debt reimbursement, but that program has not been accepting new applicants recent history.

5:44

So zooming in, looking at the numbers only, I put it by division, and the biggest and most important thing to look for is you as council members is the net increase or reduction to fund balance right here.

5:57

This line is what you care about, and you want it to be zero, and it's zero when we start.

6:02

The reason for that is that you're not increasing fund balance and you're not decreasing fund balance.

6:08

By statute, we cannot appropriate to fund balance.

Discussion Breakdown — Share of Meeting
Budget Equity Analysis████████████████████████████████████████████44%
Personnel Matters██████████████████18%
Workforce Development█████████9%
Water And Wastewater Management█████████9%
Fiscal Sustainability████████8%
Public Engagement█████5%
Public Works████4%
Procedural██2%
Pending Litigation1%
Summary of Proceedings

Valdez City Council 2026 Budget Work Session – October 2, 2025

This was the first budget work session for the 2026 fiscal year, held on October 2, 2025, at 6:00 PM in Council Chambers. Finance Director Jordan Nelson, Budget Analyst Casey DeShack, and City Manager Nate Duvall presented an overview of the budget process, financial schedule, fund balances, revenue and expense projections, and key topics such as the utility fund subsidy, personnel costs, and the permanent fund draw. No formal votes were taken, but council members indicated support for the energy assistance program and discussed future rate adjustments and pay grid evaluation.

Discussion Items

  • Budget Process and Schedule: The budget process includes a series of work sessions. The next session on Community Service Organizations (CSOs) is scheduled for October 9, 2025, and Focus Week (Financial Optimization and Community Understanding Week) starts October 27, 2025, with workshops at the Civic Center and Council Chambers.
  • Financial Schedule: General fund revenues exceed expenses, and citywide appropriations total $73 million, a 1.9% increase from 2025, below the CPI of 2.3%. The net impact on fund balance is zero, meaning the budget does not require spending from savings.
  • Fund Balance: Unrestricted unassigned general fund balance is $12.6 million, considered adequate for the organization's size. The repayment reserve is targeted at $20.3 million, while almost $50 million has been collected over the course of litigation. The difference represents litigation costs.
  • Revenue and Expense Projections: Property tax comprises 93% of general fund revenue, but the current tax agreement expires at the end of 2025, creating uncertainty. The budget assumes a conservative estimate based on the prior year, plus added personal property tax from VMC 33. State shared revenues are down, and public accommodation tax (bed tax) is declining due to waning post-COVID travel.
  • Budget Parameters Resolution: Council priorities include sustaining service levels, expanding civic center marketing ($35,000), HR career development ($30,000), wellness program ($60,500), and professional grant administration ($45,000). City Manager emphasized that the budget maintains service levels with no reductions.
  • Energy Assistance Program: Council gave head nods to proceed with $595 per household for residential only, with applications from November 3 to December 31, 2025, and a target funding of $718,000. This is not final until budget adoption.
  • CSO Funding: The 2% of operating budget cap is shown, with new requests to be evaluated during the October 9 work session.
  • Repayment Reserve: The proposed 2026 budget includes a $3.1 million appropriation to the repayment reserve, bringing it to $20.3 million. Recent court rulings have improved the outlook, but management recommends continued conservatism.
  • Permanent Fund: The charter requires a 1.5% draw ($4.35 million) from the permanent fund. Council members discussed the pros and cons of using this draw for capital projects versus leaving it invested. City Manager noted that liquidating and re-depositing would incur transaction costs, and a charter amendment might be more efficient. Some council members expressed support for using the draw for infrastructure projects.
  • Utility Fund: The water/sewer utility fund receives an operating subsidy of $1.24 million, unchanged from 2025. Rates have not been increased since 2004, and the city's residential rate ($69 per quarter) is below comparable communities. Council discussed the historical rationale for the subsidy (as a rebate for high property taxes) and the need to consider future rate adjustments, but no changes are proposed for 2026. City Manager stated that no rate adjustment is necessary for the 2026 budget.
  • Personnel Costs: FTE count remains at 137.38. Payroll costs are growing due to step increases and the removal of holds on the pay grid, with salaries growing at 4.3% CAGR and benefits at 4.7% CAGR. Council discussed the need to evaluate the pay grid to ensure market competitiveness and merit-based compensation. City Manager plans to evaluate the grid over the next year.
  • Cost of Living Adjustment (COLA): The 2026 COLA is set at 2.3%, based on Anchorage CPI for the first half of 2025. The formula-based approach is supported, with the caveat that the 8.4% spike in 2023 was an anomaly.

Key Outcomes

  • Energy assistance program parameters approved: $595 per household, $718,000 target, applications Nov 3–Dec 31, 2025.
  • No changes to water/sewer rates for 2026: Council will consider future adjustments, possibly with automatic inflation indexing.
  • Permanent fund draw of 1.5% will continue: Council discussed potential charter amendment to clarify use, but no action taken.
  • City manager directed to evaluate pay grid and benefit costs: A review of the pay grid and benefit programs is planned for the coming year.
  • Next meeting: CSO work session on October 9, 2025, followed by Focus Week starting October 27, 2025.

Meeting Transcript

Okay, we'll go ahead and get this uh work session uh going. This will be a series of work sessions for the uh budget for the 2025 uh season or 2026 season. Um so uh go ahead, Jordan, take it away. Thank you so much, Mayor. Welcome everyone to the first work session of the 2026 budget season. We are uh we have uh the same number of workshops as we've always had in the past, however, we're gonna set this overview one right at the beginning here on October 2nd. We finished city manager review of the budget as quickly as last Wednesday. So I apologize for some of the uh hectic slides out to you and then revised slides today. Uh, but the idea and the purpose behind the slides that you have in your possession are for them to sit and marinate and generate questions for you throughout the budget process. Not necessarily tonight, though. If you do have questions tonight, feel free to just stop me in the middle of it, and uh we can work through anything that you need to tonight. There are very few actual appropriations that we're gonna touch on tonight. The the main real debate around level of appropriation is simply revenues and some reserve funds, not all of them. So uh this is this is again mostly for information, though I hope that it generates some questions, and I hope you have them, and feel free to pepper me throughout the presentation. With that, the agenda for tonight, we're gonna start with budget process, just take you through what the budget looks like throughout the year. I'm gonna take you through the financial schedule, which is my favorite thing, the fund balance, and uh that's not anything new to you folks, but I'd like to. I just like to touch on that in the overview every year. That's the highest level of any organization is how much you have in fund balance or net position. Then you have the lines, and the lines is something that we've been doing now for for many years, and the lines sometimes go up, sometimes go down, uh, but they always cross. That's the punchline there. And we'll get to we'll get to those here in a minute. Budget parameters, that is something that's been new in the last three or four years where we do a budget parameters resolution. I'm gonna take you through that. The budget parameters resolution is a way for you. You already know this, but a way for you to communicate to staff and city manager and management what you'd like the city budget to look like. And so we're gonna go through some of the high points on the budget parameters resolution, the things that management heard and attempted to incorporate in this 2026 budget. And then we are going to do some appropriations on revenues and reserve funds, and we're gonna do a special presentation tonight on the utility fund and the special revenue fund there. That was asked for during department operations reports. We've got some updated numbers for you. I'll turn it over to Casey at that point. And way at the end, not listed here, but if there is time, time permitting, there's some personnel discussion. City manager has a few slides towards the end. So with that, start with budget process with the C line. This is the first workshop. Then we have CSOs next Thursday, and what I like to call focus week. Four workshops in a row starting on Monday. That Monday, October 7th, 27th workshop, rather, is uh at the Civic Center. The rest everything else is gonna be in council chambers. There's some nice footnotes in the schedule that we passed out that uh that you'll be able to read as well. And one thing I want to point out on the budget process is that it doesn't all all start on October 2nd. The budget process goes on all year long, and we are just simply in quarter four. So leave that, and we're gonna jump into the financial schedule. It often puts me to sleep, sometimes going through all those rows and columns, and so I have an otter sleeping. Uh but it's uh it's the control tower of the entire budget. This is the best way to get an idea of what city what is happening with city operations. So for for now, let's ignore all the numbers because they're hard to see. This picture is zoomed out quite a bit. The graphics down in the bottom are are what I want to draw your eyes to. So down on the bottom, bottom left, you can see that general fund revenues exceed general fund expenses, and the difference between other fund expenses and other fund revenues is exactly the same as that gap between the general fund, and that's by design. And the difference between other fund expenses and other fund revenues is exactly the same as that gap between the general fund.

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