Mayor McConnell's Sitka Budget Presentation

By Mayor Mim McConnell
May 1, 2013
Greater Sitka Chamber of Commerce Presentation
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“Providing for today… preparing for tomorrow”

*
• FY14 Operating Budget
• Our Strengths
• Plans for the Future
• Comments and Questions

*
*We’re in amazingly good shape compared to other
cities around the country and in Alaska.
*The City and Borough of Sitka has been operating
in the “Black” for years.
*Our unemployment rate in 2012 was a low 5.6%.
*Sales and Bed tax revenues have slightly
increased.
*We have a motivated citizenry interested in
creating a healthy, sustainable community.

*
Decision points to make and a fresh perspective.
*What level of sustainable governmental services are
you willing to pay for?
*What level of support are you willing to provide the
School District?
*As a community we need to holistically look at all
critical needs together (education, public
safety, social services) as opposed to only within the
confines of each institution.
Future Balanced Budgets

*
City expenses are increasing from:
*increased health insurance costs,
*and general costs of doing business that everyone else
experiences.
*We are currently undergoing collective bargaining
negotiations with two of the three unions representing the
Municipality's employees. The outcomes of these
negotiations will have an impact on overall Municipal
wages and benefits that we will need to accommodate. We
also have some employees not represented by unions and
we must also provide for equitable wages and benefits for
them as well.
Expenses

*
Other impacts to the Budget:
*School District increased costs and reduced revenue
impact the City budget. The School Board chose to
take $900,000 out of reserves which is unsustainable
beyond this year.
*Municipal infrastructure continues to rapidly age.
*Costs are increasing while our municipal revenues are
basically flat; much of this is due to severely
shrinking State and Federal assistance.
Expenses

*
*The FY14 budget has been balanced by
severely curtailing spending on
infrastructure repairs.
*Key appropriations that should be made in
FY2014 for repairs have been deferred.
*This is unsustainable and costly in the long-
term.
Cuts

*
*We will continue to adequately provide for a multitude
of basic and special services for our citizens.
*While some service levels may be reduced, no major
municipal service areas have been eliminated in their
entirety.
*Should actual revenues fall short, then we will be at
the decision point to consider expense reductions
possibly including decreased staffing.
Cuts

*
*The City staff and Assembly are addressing
under-funding of several of our sinking
funds.
*Various Master Plans call for future fee
increases.
*Rate increases will be seen for
water, wastewater treatment, harbor, and
electric (partly for bond covenants) utilities.
Planning

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*The City and Borough uses the Climate
Action Plan and adopts its
recommendations when feasible.
*The Assembly has had two visioning
sessions during the current fiscal year and
plans to continue working on goals that
were identified.
Planning

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*Blue Lake Hydroelectric Dam project: largest
infrastructure project in the history of the City and
Borough of Sitka.
*Replacement of ANB Harbor;
*Renovation of the Centennial Building and its parking
lots;
*Resurfacing of the airport runway;
Major Infrastructure

*
*Construction of a new breakwater in the Western
Channel;
*Resurfacing of our State Highways, both HPR and
Sawmill Creek Rd.
*These projects are funded from various
sources, Federal, State and Local, and all are
expected to provide a short term stimulus to our
local economy.
Major Infrastructure

*
Consolidated Operating Budget contains operating budgets for
*Sitka General Fund and Permanent Fund;
*8 Enterprise Funds (Electric, Water, Waste Water, Solid
Waste, Harbor, Airport Terminal, Marine Service Center, and
Sawmill Cove Industrial Park);
*3 Internal Service Funds (Management Information
Systems, Central Garage and Building Maintenance);
*4 Special Revenue Funds (SE Alaska Economic
Development, Revolving LID Fund, Guarantee Fund, and
Library Endowment);
*1 Fiduciary Fund (Rowe Trust);
*all Capital Projects Funds;
*and the Sitka Community Hospital.
Funds

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*Each Enterprise Fund and Internal Service Fund of
the City and Borough is a separate and distinct
business element and should stand on its own
financially.
*The General Fund should finance the expenditures
for general government services in line with
projected revenues.
*Each operating budget has been balanced for
FY14, through a combination of operating
revenues, expenditure reduction, and working
capital balances.
Financial Philosophy

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*The overall financial condition of the City and Borough of
Sitka is projected to remain satisfactory, with an adequate
level of combined working capital (both restricted and
unrestricted) for all of its funds.
*Cash flow and liquidity is also projected to remain
satisfactory.
*General Fund and six of our Enterprise Funds –
Electric, Water, Waste Water, Solid Waste, Harbor, and
Sawmill Cove Industrial Park – have insufficient revenues
and working capital to provide for the long-term
maintenance and replacement of their physical plants.
Financial Condition

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*Needed repairs and infrastructure replacement will
continue to require a combination of increased user rates
and debt financing.
*Of greatest concern is
* the rapidly declining condition of our municipal road system
and our inability to financially keep pace with the costs of
repairs.
* Other significant concerns are the potential loss of State
funding sources for water and wastewater infrastructure
repairs coupled with insufficient working capital to finance
such repairs internally.
*The City and Borough retains a sufficient level of general
obligation bonding capacity in order to meet future needs.
Financial Condition

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*The Administrator submitted a balanced budget
which includes reduced Federal and State of
Alaska revenue and no new taxes or service fee
increases.
*Federal and State revenue sources are
becoming even more uncertain.
*The ballot measure in October asks to have two
old school bonds currently paid for out of the
General Fund be paid for from the 6% sales tax.
Revenue

*
*A property tax levy of 6 mills, unchanged from last
year, is being budgeted again this year; this is the
current maximum allowed by the Home Rule
Charter.
*Sales taxes will again be levied at 5
percent, adjusted seasonally to 6 percent from
April thru September with the extra proceeds
dedicated to school-related general obligation
debt.
Taxes and Other Revenues

*
*Sales taxes are anticipated to rise by 2.36% in
comparison with fiscal year 2013 projections;
*this rise is due to the increase of the taxable sales tax
limit to $1,500 per transaction,
*and, to the removal of the sales tax exemption on
alcohol and tobacco sales to senior citizens.
*Municipal Revenue Sharing (no Supplemental Revenue
Sharing this year) and School Bond Debt reimbursement
by State of Alaska.
*Interest revenue earned by the Revolving and Guarantee
Funds.
Taxes and Other Revenues

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*The General Fund budget is essentially
balanced, with a minimal excess of revenues over
expenditures ($38.00).
*Reduction of the Capital Improvements Program will
lead to increasing levels of deferred maintenance
which will create greater financial difficulties in the
future.
*No new taxes or tax increases have been planned
for.
*It has not been planned to utilize any of the
General Fund balance (i.e. reserves) to balance the
budget.
Balanced Budget

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*We’re an island community that appreciates
resourcefulness and being good neighbors.
*We’re good at volunteering in all aspects of our lives
whether it’s health and wellness, sports, the
arts, reading, learning, investing, the list goes on.
*Sitka’s not-for-profit community is alive and
well, providing millions of NEW dollars worth of jobs
and services to Sitka and beyond.
*Downtown Revitalization is happening.
*Affordable housing and a shelter are works in progress.

*
*We have a thriving Sheldon Jackson Campus with the
Sitka Fine Arts Camp and its Campus partners with
science, music and arts programs that are world-
renowned.
*A City-wide Branding/Marketing Project with Signage
Solutions is in the works.
*The City and Borough and Sitka Tribe of Alaska
intergovernmental relationship is in good working
order.

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*The historical nature of our town contributes to our
community’s sense of place and is recognized around the
world, drawing visitors that contribute to our economy.
*The City has created lots of construction & job
opportunities.
*We have exceptional municipal services and dedicated City
and Borough employees.
*Our economy has its challenges but we’re in pretty good
shape.
*We can keep it that way, and improve it, by working
together and planning for a better tomorrow.

*
*Hire a new City Administrator.
*Adopt the ordinance that creates the Health Needs
and Human Services Commission.
*Discuss ways to increase City and Borough revenue
and reduce expenses through a multi-faceted
approach, including visioning and operational
planning combined with financial analysis.
*Develop our economy by finding new ways to
environmentally and sustainably “provide for today
and prepare for tomorrow.”

*
*Please read the handout that is on your table for more
details concerning the FY14 Operating Budget. This is the
Budget letter written to the Assembly by Jim Dinley and
Jay Sweeney.
*The next Budget worksession is tomorrow, 6pm and will
cover all the enterprise funds. The following week will be
on the General Fund.
*If you would like to contact me about ideas for the future
or other issues, I can be reached at
assemblymcconnell@cityofsitka.com
Phone: 747-2860 or 738-2888
or on Facebook: www.facebook.com/mim.mcconnell

Mayor McConnell's Sitka Budget Presentation

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