Wrangell’s new city manager sat in on her first meeting of the City and Borough Assembly Tuesday evening.
Starting work last week, Lisa Von Bargen gave her first report to council members on the state of city departments. Offered the job back in April, the former Valdez economic director reported she has been getting to know the departments under her since her arrival.
She has been getting together with staff at City Hall, the Harbor Department and Public Works this past week to visit sites. She further plans to meet with Parks and Recreation and Wrangell Municipal Light and Power personnel this week.
Since the public employees strike ended on June 29, light crews have been readying power poles along the route of Evergreen Avenue, which after several years of delays is expected to finally begin seeing resurfacing and access improvements once outstanding right-of-way issues have been resolved.
At the water treatment plant, recent rainfall has contributed to poor raw water quality in the reservoirs, which on a positive note are full. The plant itself has been able to keep up with demand as summer usage increases. The city remains on a state of conservation alert, and Public Works director Amber Al-Haddad added her department is communicating with Wrangell’s two seafood processors, which are significant users but whose access to water is critical during peak summer production.
Assembly member Julie Decker emphasized the importance of maintaining water supplies through August. “We really are entering crunch time for processing. This is the peak, so the next four weeks are critical,” she commented.
During its meeting the Assembly formally finalized changes to its wage and grade table already approved at a special meeting on July 13, approving the new table as a resolution Tuesday.
Following three years of negotiations over an expired collective bargaining agreement for 24 public employees with the International Brotherhood of Electrical Workers Local 1547 – which included at points legal action, a settlement and a weeklong strike – the agreement drops the bottom six of those employees’ 16-step wage table and adds three to the top end. The new 13-step table that creates now uniformly moves workers on the table upwards in two-percent increments, as well as a $0.75 hourly increase across the board on top of the prior wage rates.
Called up by Assembly member Patty Gilbert to answer some financial questions, city finance director Lee Burgess explained the increases on the table would constitute a net cost of $46,000 to the borough over the next three years. This figure is arrived at when factoring other components of the agreement, such as workers contributing a portion of 10 or 15 percent of their health care premium costs, depending on their date of hire.
Burgess added that those costs would be borne by the funds of the department employees work for. Most are employed with various utilities and services operated as enterprise funds, such as the harbor and light departments. Those working for more conventional departments would have to be covered by the General Fund.
Based on the year’s previously approved budget for the new year, which started July 1, Burgess further explained the added costs would largely add to departments’ deficits.
“The money would be coming from reserves unless that fund were planning on running a surplus,” he said, which was only projected for the Harbor Department.
Also on the Assembly’s plate was a resolution to apply these gains to the city’s non-unionized workers. Greater in number and already paying a portion of their health care premiums, similar changes made to these employees – dropping the bottom five steps from their 15-step table, adding three more to the top with the $0.75 hourly increase – would cost the city an added $307,000 over the next three years. The majority of this would impact the General Fund, which together with the added cost for unionized workers of those departments would be impacted by about $150,000 more per year than first budgeted.
In rationalizing the decision, Assembly member Julie Decker felt making the change would be a matter of fairness. In her view, the working environment could be adversely affected by having a two-tiered system. “This decision before us would put – in my mind, anyway – both union and non-union workers on a more even playing field,” she explained.
The Assembly voted 5-1 in favor of both measures. However, looking at the city’s financial standing members saw a lot of uncertainty ahead.
“We’ve got a lot of uncertainty coming down the pipe,” voiced Stephen Prysunka, referring to potential cuts to state revenue sharing, education and other funding sources. He asked Burgess what the city’s options would be in the future, both with setting wages and in renegotiating with IBEW for a new contract in three years.
Burgess answered that
language in the CBA allowed for the possibility of layoffs, which together with staffing reductions would be one of the “fairly limited” set of options at the city’s disposal in curbing costs. Step freezes would be another option.
Thinking of the future, Prysunka spoke in favor of undertaking an independent salary and wage study, one which would evaluate current pay levels on the basis of their relation to relative market value.
The state of Alaskan municipalities’ financial health was given a grave review in a recent assessment by the University of Alaska Anchorage Institute of Social and Economic Research. A few of the most startling conclusions it had reached were that municipal governments are generally more dependent on state revenue as recently as 2015 than 10 years before, to the tune of from $250 to $5,000 per person depending on the municipality. Local government expenditures have generally remained stable despite sizable cuts at the state level, but because of their varying reliance on state funds that cannot last long.
“The basic idea is it’s going to get worse before it gets better,” said Decker.
For Wrangell, labor statistics indicate some 30.5 percent of jobs within the borough are in local government. As for its dependence on state spending, the city received $36.5 million through state aid in 2015, or amounting to $1,155 per resident. Between its relatively high sales tax, moderate bed tax, higher-end mill rate and other sources, Wrangell’s city government brought in 40 percent of its total revenue from internal sources.
“It’s pretty eye-opening, and it really doesn’t bode well for boroughs’ financial situation,” said Assembly member Becky Rooney. She recommended that residents read the report for themselves, which details hard numbers and projections for individual municipalities. A copy of the report is on the city’s website, and was included in Tuesday’s meeting packet under the clerk’s file.
Speaking on the economy as a member of the community, seasonal resident, four-term U.S. Senator and former Gov. Frank Murkowski spoke to Wrangell’s Assembly about the state’s economic future during the meeting.
“The future of Alaska lies in the responsible development of our resources,” he began.
In the past state government had built up its operations largely on oil-based revenues, to the extent that it has little else to fall back on in Alaskas economy. With sharp drops in the price and production of crude and accompanying cuts to state spending, he warned it would need to fall more squarely on individual communities to look for revenue opportunities.
“The circumstances of that impact on our communities is being felt now, and I fear it’s going to be felt much more drastically in the future,” Murkowski said.
Taking Wrangell’s prospective grant for updating Shoemaker Bay Harbor’s facilities (see budget article) as an example, Murkowski, a former banker, recommended the city find ways to borrow the money it needs to complete the project on its own.
“I think that’s a project the community can take on,” he told the assembled members.
One of the aging float’s fingers is currently unusable for mooring due to considerable decay, which he pointed out meant lost revenue for the city. In the meantime, that also meant lost opportunity for the community, fewer boats in the water, and fewer jobs.
“The days of the handouts from the state are over,” Murkowski stated, referring to its projected $2.5 billion deficit in this year’s budget. “I’m not convinced you’re going to get a grant.”
In the case of the city’s water treatment facility, another replacement project which would depend on in this case federal grants, he urged similar solution-finding before further problems cost the community opportunity. “If you’re looking for economic development here, you’ve got to have water,” he added.
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