Wrangell's Assembly reviewed a first draft of its Fiscal Year 2018 budget Tuesday evening, during a workshop and public hearing session.
Finance director Lee Burgess presented the 43-page document, prefacing it with an overview of the city's financial situation and upcoming budgetary needs.
Burgess notes that this year's draft budget is not a balanced one, in terms of revenues versus expenditures. Some critical capital projects are anticipated, the largest being Shoemaker Bay Harbor's facilities replacement. More than $6 million that will have to be raised from a combination of Harbor Department reserves and loans to match $5 million that may be available through the state.
Another $540,000 from sales tax funds are expected to go toward the resurfacing and improvement of Evergreen Avenue, a state Department of Transportation project that will require a nine-percent match on the city's part. $567,000 is being proposed to replace critically deteriorated sections of the aging Public Safety and public pool buildings.
Further resources will be required to pay for roughing filter replacement at the water treatment plant, acquisition of a new excavator for the landfill, expansion of Wrangell's industrial park and possible acquisition of the former mill site at 6-Mile.
It should be possible to pay for these items in part because of years worth of in savings in reserve funds. General fund reserves increased by about $610,000 since the end of FY15, more than offsetting a potential spending deficit of about $457,000. Assuming no other significant alterations then, the draft budget projects reserve general funds to be at $7.03 million by the end of next fiscal year, or June 30, 2018.
The current budget draft assumes no increases to property or sales tax rates, reductions of staff or expected wage step increases. However, Burgess noted that it would not be advisable to do a repeat performance in future years without increasing tax rates.
Presently, the city's property taxes and share of sales taxes support 61 percent of general fund revenues. While Wrangell has one of the state's highest sales tax rates, it also has the highest percentage of property owners exempted by state law due to their age, thereby constricting that source of potential revenue. More than a third of Wrangell's public revenues come from other sources, be it federal or state contracts, contributions, rents or revenue shares.
Assembly member Mark Mitchell was loath to raise tax rates, especially as the Alaska Legislature continues to mull reintroduction of an income tax.
“It’s obvious that wages and benefits are probably the bulk of our budget,” he noted, looking over the draft. Mitchell questioned whether city departments could instead look into phasing out positions and consolidating to reduce costs. “We need our options open,” he said.
He asked several department heads present for the meeting their opinion on reductions.
“Right now I’m down three people, and another one looking at retiring in the fall,” reported Police Chief Doug McCloskey. The department ideally needs seven officers on staff to cover its schedule without overtime or on-call hours, and is currently down to four.
Two new officers are expected to arrive in coming months, but McCloskey added that it takes time to catch recruits up to speed, depending on prior experience.
Speaking for his power department, Clay Hammer recommended no changes.
Burgess noted there were other efficiencies staff were looking at, such as allowing people to pay their utility bills either automatically or manually online. Because of the ease and reward perks of using cards, many utility users make a monthly trip to City Hall to pay their bill, which diverts staff attention.
“Staff processes like 700 transactions a month like that,” said Burgess. “There’s a cost to having your staff wait after one person after another.”
Hammer imagined that having an auto-pay system in place could cut disconnections for delinquent accounts by 50 percent. That could in turn save his staff time from having to disconnect and reconnect utilities.
Assembly member Stephen Prysunka took the idea a step further, suggesting that savings may eventually be found in automating actual staff positions. With regular cost and wage step increases to keep up with, he did not see how the city could otherwise hold off on raising tax rates indefinitely.
With a few other comments from Assembly members, but no input received either verbally or in writing from the public, the budget draft met with approval. With additional adjustments expected, Burgess explained a final draft should be put before them again at the body's June 13 meeting.
Among its non-budgetary items Tuesday, the Assembly approved on first reading a draft ordinance updating Chapter 15 of the Municipal Code, relating to water shortage response and a process for installing
water meters on users' utility hookups. Another ordinance amending the fine schedule to suit those changes was also proposed.
One member of the public spoke out against the item, specifically regarding water meters. “I’m against it,” said Bernie Massin. He felt the city would be charging residents and businesses more to use less water, without generating any additional water.
In past meetings, Public Works director Amber Al-Haddad and Burgess have proposed changes to water rates that better reflect production costs. Higher volume users currently pay significantly less per gallon than more moderate water users, the way the rates are currently set up. Use of meters and a tightening of the schedule was a suggested solution, which would also have the effect of reining in waste. Burgess had explained a readjusted rate structure could also boost utility revenues, which in turn would help replenish reserves for needed upgrades and maintenance.
Assembly members largely voted in favor of the proposed ordinance draft, with Mitchell voting against. Both ordinances are due back for a second and final reading at the June 13 meeting.
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