Amid the widespread uncertainty and mass budget cuts under the new administration of President Donald Trump, Wrangell’s municipal leadership is not particularly concerned about the completion of any of the borough’s ongoing projects.
Currently, City Hall awaits two reimbursements from the federal government: one at around $18 million for the water treatment plant and another at $1 million from the Federal Emergency Management Agency for disaster recovery costs after the November 2023 landslide.
Borough Manager Mason Villarma said City Hall has enough wiggle room financially, meaning that as long as the reimbursements arrive eventually, the borough should be OK.
However, the future of Wrangell’s upcoming capital improvements projects — like the $25 million downtown harbor basin renovation project — is a bit wobbly as of now. If Congress cannot agree on an appropriations bill, which is uncertain, Wrangell’s projects will likely be shelved until next year.
“We don't know for sure that all of our projects aren't in jeopardy,” Villarma said on Feb. 26. “But it appears, based on initial conversations with our federal funding partners and the (congressional) delegation, that our project-related funding is safe for now.”
Moving forward, Villarma said he expects the borough to target grant funding at the state level instead of at the federal level. While those projects would probably not be as booming as a $25 million harbor renovation project, he anticipates state money being more reliable given the uncertainty in Washington, D.C.
The borough is currently working on drafting its budget for the upcoming fiscal year. But after Congress failed to reauthorize funding for the Secure Rural Schools program, which provided Wrangell with $800,000 for schools and roads last year, City Hall is beginning the budget-building process down $800,000 from last year.
The loss of Secure Rural Schools may cause the school district to make wide cuts ahead of this upcoming school year, but it will also affect things at City Hall. Villarma said he will probably need to rely on some combination of cuts at the borough level and a property tax hike to balance next year’s budget.
Increasing taxes, for Villarma, is the very last option. He said the borough will explore all other options before placing the burden on the taxpayer.
“It could be not hiring back positions that are currently posted. It could be potential layoffs,” he said. “It could be consolidation of facilities in some respect. It could be a reduction of different footprints, a vehicle fleet, and a reduction in projects.”
Secure Rural Schools isn’t the only federal funding Wrangell relies on. In his report to the assembly on Feb. 25, Wrangell’s federal lobbyist expressed concern for the future of Essential Air Service, the federal program that has for the past 45 years subsidized Alaska Airlines’ daily flights to Wrangell, Petersburg, Yakutat and Cordova.
However, Essential Air Service is fully funded through the current year, and even if Congress is unable to pass a full appropriations bill this year, funding would be included in any continuing resolution Congress adopts. Continuing resolutions are essentially temporary Band-Aids that keep the government operating at the status quo if an agreement cannot be reached on a full appropriations bill.
One policy that Villarma said is hamstringing the borough is the state’s property tax exemption for senior citizens. Since 1972, the state has required cities and boroughs to exempt the first $150,000 in value of a senior-owned home from property taxes, but stopped reimbursing municipalities for the lost revenue more than 25 years ago when state finances got tight.
More than one-quarter of the overall assessed value of residences in Wrangell is exempt from property taxes under the state mandate.
Villarma estimates that Wrangell loses around $400,000 in annual revenue because of the exemption.
The upcoming borough budget will go into effect on July 1. The assembly will work on the spending plan this spring and set the property tax rate in late May or early June.
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