Included in this coming year's draft budget for Wrangell, a decade's revenue sources are tracked. While sales and property taxes have increased slightly, reductions to state and federal funding sources have put a crimp in the city's clutch purse.
Second and third budget workshops this month were held Monday and Tuesday night as the city moves closer to a final budget draft for the coming year.
A fourth workshop has been scheduled for this evening, to deal with the Wrangell Public Schools budget. Afterward a public hearing of a draft completed budget is anticipated next Tuesday evening during the Wrangell Assembly's regular 7 p.m. meeting.
During Monday's session, assembly members and city staff contemplated its revenue outlook for the coming year (see graph). Over the past decade, reductions to state and federal funding sources have been the primary factors in reducing Wrangell's fiscal inflow, by nearly 11 percent by next year. Reductions to state revenue sharing since Alaska began contending with multibillion-dollar spending deficits in FY14 have been problematic, this year cutting the expected share down by more than half from a high of $846,000 in 2013.
The biggest dip in the budget stemmed from the complete loss of federal Secure Rural Schools contributions in 2017, dropping from $922,952 the previous year to $0, though its partial restoration for the 2018 and 2019 fiscal years have been helpful. State jail funding has taken a sharp drop since FY16, while airport security stipends that once were $118,000 each year will be phased out by this coming year.
During Monday's discussions, various revenue-adding options were considered, including raising the cap for exemptions on sales taxes from $1,500 to $2,000. The amount for individual sales totaling above that threshold are exempt from the city's seven-percent sales tax.
"It's one of the ideas that have been kicked around," said finance director Lee Burgess.
Compared to most other communities in Southeast, Wrangell's cap is on the low end, Burgess citing Juneau's at $12,000, and Sitka and Kodiak's each at $3,000. Petersburg's is the lowest, at only $1,200. In a first-such assessment, Burgess' department estimated that exempted purchases totaled $5.2 million last year. If the cap were eliminated entirely – politically not an advisable move, and economically potentially having a chilling effect on local activity – that would yield an extra $363,000 in revenue.
"That means, in theory, $363,000 in revenue," Burgess stressed. "Not that that's the recommendation in our budget."
Simply adjusting the cap by $500 could yield an extra $80,000 by his conservative estimates, admittedly not a great sum, but still of help. If coupled with a slight increase of one in the city's mill rate, an extra of $260,000 could be drummed up.
On the mill rate, for context Burgess noted the rate was about a third lower than what it was in the mid-1960s, at their height.
"We're also working pretty hard on collections," he added, improving internal procedures.
At assembly member Roland Howell's suggestion during the May 1 workshop, Burgess also agreed that costs could be reduced by phasing out paper-based billing for utilities. The city has already made inroads there with its online billing system rolled out this year, which has the added bonus of saving time among front-office staff.
On Monday the room also mulled over the health of its special enterprise funds. Growing expenditures in the sanitation fund compared to stable revenues have left its reserves dwindling, prompting a recommendation by the Finance Department that a rate increase be enacted. With sizable capital projects ahead of it, the water fund also could potentially use some bolstering by a rate change.
"The sewer fund is doing the best of all of them, comparatively," noted Lisa Von Bargen, the city manager.
Halfway into its
own five-year infrastructural overhaul, Wrangell Municipal Light and Power shows healthy reserve levels at the moment, at around $3.5 million. However, increasing new diesel generation capacity remains a big priority with the department, with a new generator it needs possibly costing in the neighborhood of $2 million.
Assembly member Stephen Prysunka noted the department counted annual rebates received by Southeast Alaska Power Agency as revenue, something he worried could give a false impression about the utility's finances. Last year the power concern approved $606,000 back to Wrangell, which then goes back into the local department's coffers. Also a member of the SEAPA board, Prysunka cautioned that the agency has a number of large-scale capital projects of its own on the horizon, and that the rebate should not be counted upon.
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