At last week’s meeting of the Wrangell Assembly, the city manager and mayor updated members on the outcome of Alaska Municipal League’s Combined Summer Meeting held earlier this month.
Held in Haines August 16 and 17, the annual conference combines the summer meetings of the Alaska Municipal Management Association, the Alaska Conference of Mayors, and AML’s Summer Legislative Conference. Speaking on it last Tuesday, Mayor David Jack recalled the main subject happened to be the state’s primary worry, its budget.
“The most important thing is that the Legislature for the last two years kind of kicked the can down the road for the budget,” he explained.
For the past five years, multi-billion dollar deficits each year have drained the state’s Congressional Budget Reserve, which with a special subaccount had been valued at nearly $12.8 billion in 2014. Subsequent spending of it to offset steep declines in oil-based revenues have the fund set to be worth only around $2 billion by next year.
“They have made cuts, you’ve got to give them credit for that,” Jack added, referring to 44 percent cuts to state spending over the same five-year timeframe. “But a source of revenue, they haven’t really been willing to take that on.”
Manager Lisa Von Bargen had also attended the summer conference, and concurred with its focus. “There was a lot of discussion,” she told members of the Assembly.
From a municipal standpoint, Von Bargen noted that cuts to state funding – be they to capital budgets, agency payrolls, education funding or cost-sharing – are less a matter of cutting than they are a shifting of the burden for public services onto individual communities.
“We are facing cuts from the state, such that we’re not getting as much money in terms of community assistance,” she summarized. “Cuts to departments are trickling down in the form of expenses now that have to be borne by the municipalities. We’re being squeezed at both ends.”
A number of communities across the state have subsequently had to increase fees and utility rates, or enact new forms of taxation. In other cases, loss of funding for programming has meant cuts to services. In Wrangell’s example, the impending loss of a security contract between the airport and local police will likely necessitate a reduction in staff.
“We’re losing an entire officer because of cuts,” said Von Bargen. Further reductions for upkeep of Wrangell’s jail and to training assistance have their impacts as well.
As she explained to the Assembly, limitations on available funding for services and for projects means the city is going to need to change the way it handles them. On projects, Von Bargen indicated she would prefer to have site evaluations and designs done less often by in-house staff, which on the face of it seems at odds with saving money.
“Given the shortage of funding here in Wrangell, I think the priority has been on trying to have as much work done in-house as possible. And that is important and commendable, but it puts an enormous amount of pressure on staff, and it puts a huge amount of liability on the municipality,” she explained. “What ends up happening there is that things can get missed. … You end up with a scope that has a lot of unknowns associated with it, or you end up with an inappropriate scope,” which can significantly alter projects down the line.
With the Alaska Legislature passing another budget lacking a fiscal plan, Jack said Alaska’s mayors have decided they will increase their presence in Juneau.
“The mayors came up with the idea of sending a delegation representing the mayors of Alaska, from Anchorage to the North Slope, and Southeast,” he said. A committee has since been formed, to organize a plan to this end in the coming month. “To be present at the next budget hearing, whenever the governor decides to call a session for that purpose. To be present and basically say ‘It’s time to do something.’ We can’t go on kicking the can down the road. It’s time to do something, and the people of the state of Alaska are tired of them not getting the job done.”
Alaska Conference of Mayors have for the past couple of years submitted resolutions to the Legislature calling for a “three-legged stool,” or a plan involving cuts, a Permanent Fund restructure and new revenue. “We weren’t specific on how that was done,” Jack explained.
“They’re just not listening,” he added. By having a group of mayors there in Juneau when the next special session is called, ACM members hope to make themselves better heard. “At least the news media would be interested, if the legislators aren’t.”
“The mayors really decided they need to have a strong presence speaking to elected officials about getting a budget solution,” said Von Bargen. “I think everybody understands that budget solution at some point has to include other revenue sources. We can dance around what ‘new revenue sources’ means, but the fact of the matter is it’s going to be a sales tax or an income tax, or a combination of both – it has to be.”
In Wrangell’s case, a sales tax could further undermine its financial position. Already one of the state’s highest, at seven percent, the addition of a statewide rate could become untenable for residents.
“If that becomes an unaffordable standard for the people in that community, the only option is for the municipality to lower their sales tax amount. So that’s revenue lost,” Von Bargen explained. This effectively could hamper the municipality’s ability to collect the revenue it needs to function. “They are at the same time facing all of these cuts. Those expenses are being pushed onto the municipalities.”
The conference at least caught the ear of Gov. Bill Walker, Jack noted. Arriving by the morning ferry, he had been the keynote speaker for lunch during the legislative conference. He remained the entire day, meeting with delegates and hearing their concerns. “I think it was good of him to stay and listen to everybody,” Jack commented.
Gov. Walker, was a member of AML for years, “He comes to every one of our meetings. Every one,” said AML director Kathie Wasserman.
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