At a Finance Committee meeting Thursday night, the Juneau Assembly developed a plan to close its multi-million dollar budget gap created by legislative inaction and a handful of gubernatorial in late June.
Days before Juneau’s budget for fiscal year 2017 became effective at the start of July, Gov. Bill Walker cut about $1.3 billion in state spending using his veto power to try and fill Alaska’s then-$4 billion budget hole.
Walker’s vetoes left the city’s previously balanced budget roughly $4.8 million in the red, but the Assembly now has a plan to cover most of that.
The Assembly will cover the majority of its deficit using its available fund balance. The city will pull about $2.8 million out of the available fund balance, which is currently about $12.3 million.
That fund is an amalgamation of years of city revenue savings and leftover money from capital improvement projects. After the city pulls the $2.8 million it needs from the fund, it will still have a balance of between $8 million and $9 million — well above the recommended $4 million to $5 million threshold the city doesn’t want to dip beneath.
“A balance of $8.4 million, we believe, still provides a reasonable cushion if things come up,” City Finance Director Bob Bartholomew told the Assembly at the meeting. “I think we have sufficient savings even if we go directly to the available fund balance.”
The city will use $696,000 previously allocated to deferred facility maintenance to help cover the deficit. Drawing a couple million out of the available fund balance was a fairly easy decision for the Assembly; using the deferred maintenance money wasn’t.
Assembly members Debbie White and Mary Becker initially took issue with using these funds.
White likened deferred maintenance to car repairs, explaining that if you don’t replace your breaks when you need to, the problem will get worse and affect your rotors as well. Putting off building maintenance will only make for more costly and extensive repairs later, White argued.
“We’ve got city employees that are working in facilities that are pretty much falling apart,” she told her colleagues.
Several of her peers and Bartholomew pointed out that the city still plans to spend about $2.5 million on deferred maintenance in the coming year. This was enough for White to withdraw her objection.
The city will look to find a total of $500,000 in general government operating budget savings, and it will $400,000 of sales tax revenue generated during the last fiscal year to cover the rest of the deficit.
This all adds up to about $4.4 million, a little shy of the roughly $4.8 million budget gap, but the Assembly will have to wait until its next Finance Committee meeting in early November to figure out how it will cover the remaining portion of its deficit.
That’s because Gov. Walker’s vetoes cut into the Juneau School District’s budget by about $450,000. And before the Assembly can determine how it wants to make up for the lost funding, it has to figure out how much money the state will be giving the school district.
Late last month, JSD officials were somewhat shocked to find that their projected enrollment numbers were too low, off by more than 210 students.
On Thursday, the school district’s Finance Director David Means said that the additional students could mean an increase in state funding of about $1.5 million. The Assembly won’t know how to address this last piece of the deficit until the enrolled-student count is finalized in late October, and the school district knows how much additional funding it will get from the state.
• Contact reporter Sam DeGrave at 523-2279 or sam.degrave@juneauempire.com.
