The City and Borough Assembly passed a budget this week, at a specially held session at City Hall on Monday. The meeting involved a work session which gave its members time to discuss individual line items with finance director Lee Burgess.
The budget which was passed works within the current property tax rate of 12.75 mills and includes several new revenue or cost-saving items, such as allowing city employees to pay 15 percent of all premiums and receive a 5-percent credit if they participate in the plan’s wellness program.
Two other items will require an ordinance change, such as reducing the number of tax-free days from two to just one per year. Meant to encourage shopping locally, the days exempt purchases from sales taxes.
The other item would raise the price of building permits: from $5 to $50 for repairs, from $10 to $100 for residential construction, and from $15 to $150 for new commercial construction. At a previous meeting it was brought to the Assembly’s attention that the city’s permit applications were wildly undervalued compared to other communities.
In addition to building permits, the budget also will increase harbor rates – approved by the Assembly at its previous meeting this month – and a sanitation fee increase of three percent. The latter was already in effect and is the last of a six-step increase.
A number of shortfalls do exist in the budget, which is otherwise balanced. A list of capital items will not be funded for the coming year, such as large maintenance projects at the pool and Public Safety Building, and new service vehicles. Borough manager Jeff Jabusch reported he would continue to look for other sources of funding for these and other items.
There were still some areas Assembly members felt would need to be further scrutinized moving forward. Julie Decker noted a divergence between incoming revenues and employees’ benefits and wages over the past decade.
“It’s really drifting apart,” she said.
Burgess responded the declines in revenues largely reflect unpredictable funds sourced from the state and federal governments. Significant reductions since FY15 to state revenue sharing amounts and payments for Wrangell’s jail will together amount to around $485,000 by this year. On the other hand, while city sales taxes have dipped slightly, property tax revenues have increased slightly more over the same time period.
As for rising costs, Jabusch pointed out the single biggest factor has been a rise in the cost of health insurance for city employees.
“It’s the insurance that’s killing us,” he said.
Though previously the city had been preparing for a 37-percent increase in its premiums this year, it worked out a similar arrangement with provider Premera for only a 20-percent increase, which while better, still comes as a significant jump.
Jabusch and Burgess had looked at other options for insurance as a cost saver, but the benefits were not without their disadvantages, both to the city and to individual staff members. Otherwise, Jabusch pointed out wages and benefits have remained steady and were about average, relative to other comparable communities.
He went on to say there were some other sources of revenue that could be pursued, which he found made for unpalatable solutions. Among these would be an increase in the property taxes paid by residents. Another would be what Jabusch called “hidden fees” – city taxes and surcharges attached to motor vehicle license applications and assorted transactions. But he warned that a rise in costs coupled with a decline in services could end up having a detrimental impact on the community, ultimately working to make it a less desirable place to live.
“We’re doing O.K. right now, but the trends are not good,” said Decker.
“I think things are going to get worse before they get better,” fellow Assembly member Daniel Blake agreed.
Decker proposed an amendment to the budget which would include $15,000 from
the Economic Recovery Fund line item to go toward painting an advertisement on the
city storage building at the boatyard – colloquially known as the “totem shed” for the totem poles it has long stored – boosting the shipyard’s services and providing a link to its website. The idea originated with the Economic Development Committee last year.
The amendment was unanimously approved, and the amended budget was likewise passed. The new fiscal year takes effect tomorrow, along with new rates and fee increases.
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