Thanks to the use of federal CARES Act funds to offset wages, and not as bleak a year as had been expected for sales tax revenue, the city general fund is projected to close out Fiscal Year 2021 in the black anywhere from about $100,000 to $800,000.
However, the next fiscal year starting July 1 is less certain, according to reports at a borough assembly workshop Feb. 9.
"This paints a really great picture for FY21, but I need to caution you for FY22," Borough Manager Lisa Von Bargen said in the workshop.
Looking ahead to Fiscal Year 2022, Von Bargen said assembly members need to remember that if it were not for the CARES Act money, Wrangell would have faced a deficit this year.
Next year is unknown on all counts.
"If we have the 2020 level of sales tax revenue, we will have a deficit of almost $237,000 for FY22 if we make no changes to our expenditures," she said. "I feel like it is reasonable that we would have a level (of expenditures) that is somewhat similar, or a bit reduced, but those are discussions we can have."
Less sales tax revenue would push up the deficit, she said.
Early in the pandemic, the borough had feared sales tax revenue could be down by as much as 50% as the summer tourism season disappeared, businesses closed their doors and workers lost wages. But tax revenue for the July-September quarter was down only 20% from the previous year.
Von Bargen said Wrangell's general fund is looking good heading toward the end of the fiscal year on June 30. However, the next year is going to present a hurdle to clear with a continuing shortfall in sales tax receipts - unless more federal aid is forthcoming.
"It makes me nervous that we were able to salvage and actually do fairly well based on federal dollars,"
Mayor Steve Prysunka said after the manager's presentation. "You don't want to base your budgets on that happening again."
Last spring's CARES Act allocated $1.25 billion to the state of Alaska, which shared almost half of it with cities and boroughs across the state to help cover COVID-related expenses and provide help to their ailing economies. Wrangell received $3.85 million under the program.
Wrangell businesses and nonprofits received about $8 million in CARES Act funds, separate from the city money.
Congress is considering a proposal by President Joe Biden for additional federal aid to states and municipalities this spring, though passage and the amount is still uncertain.
Wrangell's general fund covers multiple city services and facilities, including the police department, Nolan Center, parks and recreation department, and even the cemetery. In addition to lower sales tax receipts, the city is seeing less revenue in other categories, adding up to about $325,000 less general fund revenue this fiscal year, Von Bargen told the assembly.
By using CARES Act money to cover some general fund spending, such as the police payroll, the municipality is able to cover the shortfall and will end the fiscal year with a surplus, she explained.
The size of the budget surplus at the end of the fiscal year on June 30 will depend mostly on sales tax receipts, she said.
The municipality collected $606,000 and $755,000, respectively, in sales tax revenue the first two quarters of the fiscal year, with third-quarter tax returns not due until April.
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