In one of their final budget workshops for FY 2021, the borough assembly gave
guidance to city administration to do as much as they can to close Wrangell's general fund deficit. According
to the agenda packet for the June 10 meeting the FY 2021 general fund was facing a deficit of $801,451. However, city administration is
anticipating that roughly $350,000 in wages for the upcoming financial year will be eligible for reimbursement through the CARES Act, "due to time spent on COVID-19 by existing staff through
December." This would
bring the deficit down to $451,451.
"Because of a lack of cruise ship traffic coming in, sales tax associated with all of those things, and just a general decreased economy as the mayor pointed out in a text to me earlier today, or a few of us earlier today, we're now officially in a recession," Borough Manager Lisa Von Bargen said.
Von Bargen pointed out that the city does have approximately $5 million in reserves. Potentially, they could tap into that money to cover the FY 2021 deficit. In previous years, she said, the assembly has authorized up to roughly $400,000 in general fund deficit to be covered by reserves, but the city has not had to spend that. The question was whether or not the assembly had any tolerance for using their reserves, and if so, how much.
This idea initially divided members of the assembly. Assembly Member Julie Decker said she was leaning towards deficit spending, at the moment. Ryan Howe, recently appointed to the assembly, also felt that using the city's reserves seemed like a good idea.
"This is what you have a reserve for," he said.
However, Assembly Member David Powell said he was not comfortable with pulling money from the reserves. Assembly Member Patty Gilbert wanted to know if there was any way to shrink the deficit further, hypothetically down to $250,000 instead of $450,000.
Mayor Steve Prysunka also voiced concern about pulling from the reserve funds. The financial situation at the state level was desperate, he said, so Wrangell needs to consider the possibility that state funding could be shrunk or cut off in the future. He also said, with residents being financially impacted because of the COVID-19 pandemic, he could not consider raising local rates to increase revenue with a good conscience. He also pointed out that the city has many Capital Improvement Projects (CIP) that would need to be accomplished at some point, more than their reserves could cover. With all this in mind, he said they needed to guard their savings as much as possible.
The assembly also discussed some ways the city could close the deficit gap even further. Powell suggested a travel suspension for city employees, save for absolutely mandatory needs. Prysunka also suggested the city push back as many CIPs as possible to the later half of the financial year, to try and bring in money as much as possible before it has to be spent.
After some discussion, the assembly decided to direct administration to shrink the deficit as much as possible, without using Wrangell's reserve funds. A public hearing on the draft FY 2021 budget was scheduled to take place the following Tuesday, June 16.
During this meeting, the assembly also reviewed some upcoming CIPs and other expenses. There are some "legacy" expenses for the old Wrangell Medical Center, in the amount of $62,512. These expenses, according to the agenda packet, are for property insurance and environmental monitoring. Other expenses, in the form of CIPs, include $155,000 for an assessment of the Public Safety Building, $210,063 for the Reservoir Bypass Design project, and $529,521 for the Power Generation Solution project, among others.
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