Budget Angst

The budget is taking most of our attention these days. I thought I would talk a bit about some of the issues we are dealing with. The Assembly must pass a balanced budget each year, and shortfalls in property and sales taxes present a fiscal challenge. The lag in revenue collections means the shortfalls will hit us hardest in FY 10 - beginning in another year. At that time our Finance people predict at least a 5 million dollar deficit, and higher in future years. We will have to balance the budget either by cutting services or raising taxes, and in hard economic times, raising taxes really isn’t an option.

Against this backdrop the Assembly is being asked to fund a number of very worthy projects from United Way, the Affordable Housing Commission, the Juneau Economic Development Council, the Juneau Arts and Culture Center, the Juneau School District, Care a Van, funding for rebuilding McPhetres Hall and preserving the Russian Orthodox Church. At some point this year the school district will ask us to put several school bond issues on the ballot for next October to renovate schools. If the Assembly and voters approve the debt service mill levy - which means your property taxes – will increase.

The city does have budget reserve funds. We are much better off than many cities down south. We have something like 4 million in emergency reserves and something like 10 million in the sales tax budget reserve. Those reserves, by the way, impact the city’s bond rating. Drain the reserves and the bond rating goes down and borrowing costs go up. I believe the manager will propose funding part of the deficit through cost cutting and part through the budget reserve. We could do that for several years if things did not get worse.

There are other complexities. Large amounts of our budget go to capital projects: schools, the pool, a new computer system, the parking garage, the new public works shop and many others. You can view this year’s Capital Improvement Projects (CIP) proposals which were presented at our last Public Works Meeting. http://www.juneau.org/clerk/PWFCAGENDA/documents/CIP_Recom.pdf. This file is useful because it includes funding sources – sales taxes, water funds, harbor, port and cruise ship fees and state grants.

When we go to the voters to ask to continue various sales taxes, we tell them that what they are approving is “intended” to fund this or that project, but there is not any legal obligation. In Alaska most dedicated taxes are unconstitutional. We can only say we “intend” to spend the money on project X or Y. Legally, we could take money that we told you we were going to use to fund project X and do something else. We could fund operational shortfalls by canceling building projects that voters thought they “approved.” If we do that – I wonder what the likelihood is that the sales tax will be approved the next time around.

This recital is oversimplified, but you get the idea. The bottom line is less money means jobs and/or services have to be cut. To the extent we hold the line or reduce funding this year, we won’t have to cut as much next year.

As I said, the good news is that the city is in a lot better shape than many. If the economy turns around quickly, all this angst goes away. If it stays down or declines further, our deficits will increase. If oil prices stay low, revenue sharing from the state will decline, increasing our deficits even more.

So just like each of us individually, CBJ needs to live as frugally as possible for the moment and hope things turn around so we won’t have to sell part of the farm next year and all of it the year after that. We’re OK for the moment. We’ve got some money in the bank to help us through a few hard years. Hopefully, that will be enough.

Juneau continues to await the resolution of our state senate seat. I’m sure we all have opinions there. Mostly I am trying to focus on the city and leave that battle to others—but it certainly can be distracting. As more and more names are discussed, inevitably Assembly members’ names get tossed out. Jeff Bush’s is prominent in that mix. I assume the Mayor’s name is there, too, maybe Bob Doll’s. Somebody might have even said “What about Anderson?” At which point everyone looks at each other and says “Nah.”

More importantly we are awaiting the final budget decisions of the state. Those seem to change daily so it is hard to make firm plans until the final bills are both passed and signed. Wednesday the 15th at 5:30 the Assembly Finance Committee will meet and continue its hearing of funding requests for the coming year. Currently, Johnson Youth Services and the Youth Activities Board will present their requests. When the agenda is posted it will be at http://www.juneau.org/clerk/FC.php

Tuesday the 14th at 7pm the Planning Commission meets and there is a hearing on another proposed WiMax tower—this one downtown on Capital Street. There are some interesting applications in the consent agenda on development in Lemon Creek and at the Rock Dump. It’s worth a glance at http://www.juneau.org/plancomm/Agenda041409.php

We received the proposed city budget last week. As I mentioned previously, this coming year seems to be OK—but next year (FY 11) we have a projected 5+ million dollar deficit. Of course this depends on the economy. Much of the shortfall is projected to be because of a decline in sales tax revenues. Princess Cruise lines just announced they would be cutting a ship from their Alaska routes this year. Royal Caribbean had previously announced they would cut one of their ships as well. These cuts will affect our economy and our sales tax revenue.

What this means is that the city is unlikely to fund anything new, including added costs for area wide recycling. In fact there has already been pressure by some on the Assembly to use this situation to “cut government.” I will oppose that effort and suggest that if we need to cut the budget more, we should look first toward cutting capital projects. The budget info is worth reviewing—at least the summary page at
http://www.juneau.org/financeftp/FY10RevisedBudget.php

Assembly Member Chambers is sponsoring a Resolution to be heard April 6 which opposes a Congressional proposal to strengthen the Clean Water Act by reinstating rules that were in force prior to 2002 which prohibited dumping mine waste into waters of the US. This legislation is primarily directed at mountaintop mining in West Virginia, but it also impacts the Kensington Mine proposal to dump waste rock in Slate Lake. The legislation can be found at http://www.govtrack.us/congress/bill.xpd?bill=h111-1310

I support the Kensington Mine, but do not support policies which harm the environment. I think this is a key issue. The mine can go forward in an environmentally responsible manner – which will cost more money – or in a manner that disregards environmental damage. We need to stand up for responsible development.

There are a number of new and semi-new land use planning reports – including proposed updates of Title 49 on developments. See them on the CDD site http://www.juneau.org/cddftp/

We just released a new Greenhouse Gas Emissions Inventory. We have asked the Sustainability Commission to review this and make recommendations. See the report at
http://www.juneau.org/clerk/ASC/COTW/2009/2009-03-23/documents/Juneau_GHG_Inventory_for_2007_FINAL.pdf

I hope many can attend our Capital City Forum April 25 from 9-Noon. Many of us are concerned about capital creep and what we can do to keep the capital in Juneau. Join us to share your views and listen to others. http://juneau.org/clerk/misc/news_items/2009-03-13-Mayor_re_Capital_City_Forum-Revised_Contact_Info.pdf

The political duel over the appointment of a replacement for Senator Elton goes on. It is a situation which I am happy to stay FAR away from. But I confess to being entertained.

This past week we began our yearly budget process. Tuesday the School Board presented their budget situation. They said they would be taking a hard look-- but they will still be asking for bond issues to be on the October ballot for several schools, particularly Gastineau Elementary, Auke Bay Elementary and Marie Drake. I have mixed feelings. But I guess if we put them on the ballot - citizens can vote on what they are willing to pay for. The School Board meets Tuesday 3/17

Wednesday we had a Finance Committee meeting. The Manager said he could work out funding an increase in rush hour bus runs and we approved that. But there are many other requests for increases, and we just don’t have the money. The budget looks OK for the coming year due to past revenue-- but the year following we are looking at a 6 million deficit unless economic conditions change. So there will be great pressure to limit any new commitments.

At Monday’s Assembly (see agenda link at right) we will put in our WISH LIST to DOT for their Statewide Transportation Initiatives Planning. We’ll approve bid awards for the DZ Covered Play area and for the Airport/Pool Heat Pump contract. Up for hearing, among other things is a new lease for the Juneau Arts and Humanities Council.

Finally- the Assembly is planning an April 25th Public Planning session on bringing the Community together to promote Juneau’s status as Alaska’s Capital. I hope all of you will be able to attend http://juneau.org/clerk/misc/news_items/2009-03-13-Mayor_re_Capital_City_Forum-Revised_Contact_Info.pdf.