Valdez City Council Strategic Planning Day 1 – September 18, 2026

The Valdez City Council convened for Day 1 of its two-day strategic planning work session, facilitated by consultant Karen Kirk. The session covered council roles and responsibilities, status updates on 2025 action items and the council's top four priorities, an extensive budget and financial outlook presentation by Finance Director Jordan, a mill rate and tax cap discussion, preliminary FY2027 budget parameters, and a preview of Day 2's priority-setting work. Per the work-session format, transcribed minutes are not taken and audio is available upon request. Note on date: The agenda is printed for Thursday, June 18, 2026, 9:00 AM at the Civic Center Conference Room, while the provided meeting timestamp is 2026-09-18; this summary uses the provided timestamp of September 18, 2026.

Strategic Planning Kickoff, Ground Rules, and Icebreaker

• Karen Kirk introduced the agenda, handouts labeled A–E, engagement protocol (respectful communication, no side conversations, staying on topic), and the parking lot for deferred topics.
• She reviewed the organizational foundation: the city's mission is to "cultivate an environment of opportunity, sustain prosperity, and well-being for everyone, all community members"; Valdez has no adopted vision statement.
• Council members completed a three-minute puzzle icebreaker in which three members were blindfolded and three could not use their hands. The facilitator praised the council for finishing under deadline using respectful communication, drawing parallels to consensus decision-making and focusing on the "forest," not the "tree."

Roles and Responsibilities

• City Clerk Sherry, with 37 years of experience, reminded the council that it exercises all legislative and policy-making powers under the charter, while the city manager has the administrative role. The council hires the city attorney, city manager, and city clerk. She advised against being swayed by a few passionate speakers at the dais, noted the "silent majority," and reminded members they can use motions to postpone and the goal qualifiers taped to the dais.
• City Manager Nate described administration as the "hands" and council as the "eyes," stating the council "has the absolute right to be absolutely wrong," and that staff will advise but ultimately carry out council decisions. He noted the mayor or any two council members can place items on the agenda, and that personnel matters should be directed to him rather than staff. He mentioned the city has roughly 134 employees plus temporary/temp staff.
• The Mayor encouraged new members to use Nate's open door and noted the council's practice of respecting the manager's personnel authority.

City Manager Updates on 2025 Action Items and Top Four Priorities

• Housing subcommittee: The subcommittee stalled but an invite has been sent to restart it; recent state legislation changes may affect earlier decisions, but the city is "no harm, no foul."
• VCB/public accommodation tax: The collapse of the destination marketing organization occurred five months after the city acted; letters of interest are being solicited to establish a new board.
• Permanent fund: The $300 million milestone was noted, but a celebration was deemed inappropriate given the current financial situation.
• Prince William Sound College: Conversations have not been as fruitful as hoped; the city may engage again once a new college director is on board.
• Priority 1 – Housing (increase housing stock by fall 2027): Blueberry was cited as a success; Copper Valley Telecom is exploring housing; the city manager called housing a still-valid priority.
• Priority 2 – Child care (operating licensed facility by fall 2026): Head Start is operational but faces staffing challenges; the district office facility will not open by the school year, with a target of before 2027 or, more conservatively, spring 2027. The entire $880,000 thread grant was expended last year on playground equipment and grants to Head Start, preschool, and Sugar Bar Daycare. Councilmember feedback noted the current program operates as a learning center (roughly 8 a.m.–3 p.m.), not a full daycare, causing community confusion; Head Start's end target is approximately 6 a.m.–5:30 p.m., limited by state student-to-adult ratios. The city manager noted many city staff fall in the 80–120% of median income range underserved by low-income programs.
• Priority 3 – Maintenance: Projects continue; the Meals (Meals Hill) Avenue project is underway.
• Priority 4 – Outdoor recreation, tourism, maritime, and community: The Civic Center is being leveraged for revenue; the waterfront master plan needs revision; Kelsey Dock and Meals Hill are cited as spaces that are community-first and tourism-supportive; the museum has been boosted by cruise ship revenue.
• Mooring dolphin: The dolphin was installed last fall and is operational, but stevedores and pilots have been slow to use it; the city is working with DOT (with Senator Rousher's assistance) on the ferry terminal. Some cruise ships prefer lightering, which bypasses the dolphin.

Budget Overview and FY2026 Financial Outlook (Finance Director Jordan)

• Total fund balance is $440 million, mostly in the permanent fund. The general fund unrestricted/unassigned balance is roughly $17 million, which Jordan called low given city revenue approaching $100 million; he stated it should be closer to 28% of revenue, and council later discussed a 20% target.
• Repayment reserve: Approximately $19.8 million remains, tied to escaped property. History: A Department of Revenue (DOR) supplemental roll for 2017–2021 added $600 million in assessed value, and the city collected $15 million; the council created a repayment reserve in December 2022. Judge Seaman's order removed 2017–2018 from taxation, and the city repaid $3.8 million (plus penalties and interest) to the taxpayer from the reserve. Five escort tugs were ruled taxable, and DOR was ordered to correct assessments, which has not yet occurred. A supplemental roll for 2022–2024 is expected and could be an additional $15–25 million.
• Pipeline valuation: The FY2026 budget assumed an $8 billion pipeline valuation; DOR assessed $10 billion; the State Assessment Review Board (SARB) set the value at $13.8 billion. That creates roughly $25 million in additional revenue, of which $15.2 million must be applied to bonded debt (prepayment of the GO22 sewer force main loan) under the ad valorem revenue cap. A resolution to accept and appropriate the $25 million is planned for the second council meeting in July; action is technically not needed until December 30.
• FY2027: Approximately $12.6 million in additional prepayment capacity will be needed. The easiest option is a $7 million reimbursement bond for the Meals Avenue project, which would help cover the gap.
• Revenue mix: The FY2026 budget projected $73 million in total revenue, with $55 million (76%) from property tax; actual revenue is about $98 million, of which property tax is 82%.
• Jordan cited GFOA best practice to use one-time or unstable revenue for non-recurring expenses that lower operating costs (e.g., paving, water/sewer fixes), reserves, or debt, and warned against projects that expand the city's operating footprint.
• Staff projections show the expense trend will not cross the tax cap trend through 2033 at current service levels. Key risks include the expected supplemental roll, changes to AS 43.56 (including gas pipeline tax discussions), and HB 13 not materializing.

Mill Rate and Tax Cap Discussion (20 vs. 19 vs. 13.8 Mills)

• Valdez levies 20 mills (2% of taxable value). Jordan explained that under statute, the rate applied to oil and gas property (AS 43.56) must match the municipal rate, so industry pays 20 mills regardless; lowering the mill rate would send money to the state, not save industry anything.
• Each mill is worth approximately $4 million in revenue. Dropping to 19 mills would save the average homeowner about $325–350 per year but forgo $4 million annually forever and increase tax cap flexibility. A 13.8-mill rate would cover current service delivery but forgo $25 million in revenue.
• Council positions: The Mayor explained the drawdown of savings as moving funds into productive use. Councilmember Kevin questioned why 19 mills was the only alternative given the 13.8-mill service level, but ultimately stated he would stick with 20 mills until the settlement picture and HB 13 are clearer. Councilmember Missy favored keeping 20 mills and using exemptions to help homeowners rather than lowering the rate; she cited community complaints about taxes and crumbling streets. Councilmember Jimmy said he would keep 20 mills and capture the full 20 from industry. Councilmember Lester noted the $350 savings was not material and that a bigger impact could be made with the revenue.
• HB 13: If enacted, the governor's residential exemption would reduce the debt service obligation at 20 mills from $21.7 million to $17.4 million. Council members expressed skepticism about the governor signing it.
• Senior exemption: The Mayor noted Dave Tuznoth's proposal for a $350,000 senior property tax exemption, which could go to the voters without waiting for HB 13. City Clerk Sherry cautioned that exemptions stack (seniors currently receive the $150,000 statutory exemption plus the $77,000 primary home exemption), and an increase could eliminate tax burden for some seniors; the city has an aging population to consider.
• The council generally agreed to keep 20 mills for FY2027 and revisit if HB 13, the pipeline settlement, or the supplemental roll changes the picture.

FY2027 Budget Parameters

• Jordan described budget parameters as broad-based council guidance to administration, to be adopted by resolution at the second meeting in July so staff can build department budgets starting August 1. The process includes manager review in September and public workshops in October.
• Permanent fund: The council discussed the annual 1.5% charter transfer (currently about $3.8 million) and the FY2026 appropriation of $867,150 back into the permanent fund. Council members generally supported continuing to use the 1.5% transfer and appropriating at similar or greater levels; Jimmy advocated putting more into the permanent fund, citing North Slope Borough, while another member said the fund is doing well and does not need additional money.
• Personnel costs: The council agreed to continue the CPI-based cost-of-living adjustment formula; the projected COLA for FY2027 is 3.2%. The Mayor noted there have been years with no COLA or a bonus instead.
• Health care: The city is self-insured; industry trends point to double-digit renewals, but Jordan said the city's plan is well positioned and he would estimate renewal under 3%. Councilmember Missy expressed concern that the plan is exceptionally generous (e.g., no deposit for surgery, free weight-loss drugs) and may need review, while another member urged not punishing employees for macroeconomic trends because good benefits are a retention tool. The city manager said options are being reviewed in time for budget season.
• Capital projects and bonding: Jordan listed options including the Meals Avenue reimbursement bond (easiest), the fully designed BCT waterline project, pavement management phase six, rural roads, a baler building, an old harbor launch ramp, and a coho building. City Manager Nate cautioned that delivery capacity (contractors, lodging, and project managers) limits how many bonded projects can be executed per year; a sustained $25 million annual bonded program would require more project managers. He recommended budget parameter language ensuring enough callable bonded debt is on the books to capture whatever mill levy the council sets.

Goals and Priorities Preview (Day 2 Preparation)

• Karen Kirk reviewed goal identifiers (topic, what about it, action, metric, target date), the nine goal qualifiers used to filter proposals (top five being impact, sustainability, personnel burden, budget, and high-need service/economic impact), and the mission/SWOT handout from last year's assessment.
• City Manager Nate reported results of the Flash Vote community survey: Housing and the condition of streets/sidewalks both showed high importance and low satisfaction. Child care showed lower importance than in past years but also low satisfaction, with notably higher importance and lower satisfaction among female respondents. He found no overwhelming public demand for a new priority beyond the current set.
• Nate noted Valdez is one of the few Alaska communities with more job listings than unemployed individuals, and that attracting population (including Coast Guard-related growth) is worth about $15,000 per person in tax cap revenue. Councilmember Green had requested the Flash Vote; the council discussed potentially running a more targeted future survey on business/economic/workforce development.

Key Outcomes

• The FY2026 resolution to accept and appropriate the additional $25 million in pipeline-related revenue, including the $15.2 million prepayment to GO22, will be brought to the second council meeting in July; council input will shape how the remaining roughly $10 million is used.
• Council leaning on the remaining funds: bolster reserves (approximately $3.5 million toward a 20% unrestricted fund balance target via the repayment reserve) and direct the rest to infrastructure projects, with some members favoring projects over the permanent fund and Jimmy preferring any remainder go to the permanent fund. No formal vote was taken.
• The council reached general consensus to maintain the 20-mill levy for FY2027, revisiting only if HB 13, the pipeline settlement, or the supplemental roll changes the fiscal picture.
• The council agreed to continue the CPI-based COLA formula (projected 3.2%) for FY2027.
• Budget parameters will be finalized after Day 2's priority discussion and adopted by resolution at the second meeting in July.
• Day 2 of the retreat will run 9:00 AM–2:00 PM and will be solely focused on priorities discussion, followed by finalizing budget parameters.
• City Clerk Sherry announced that Precinct 3's polling place will move from the Road River fire station to the airport due to ADA accessibility requirements, beginning with the upcoming primary election.