Mark Sabbatini / Juneau Empire
Juneau City Finance Director Jeff Rogers, second from right, updates next year’s city budget to reflect changes made Wednesday night by the Assembly’s Finance Committee during a break in the meeting. The committee approved a $172.3 million general fund spending plan that on paper shows a $10.3 million surplus, but that extra amount is subject to considerable unpredictability – including a potential loss of $16 million in state funds – before a final budget is approved by the full Assembly by June 15. Assisting Rogers with the budget presentation to Assembly members are, from left, Deputy City Manager Robert Barr, City Manager Rorie Watt and Budget Analyst Adrien Speegle.

Mark Sabbatini / Juneau Empire Juneau City Finance Director Jeff Rogers, second from right, updates next year’s city budget to reflect changes made Wednesday night by the Assembly’s Finance Committee during a break in the meeting. The committee approved a $172.3 million general fund spending plan that on paper shows a $10.3 million surplus, but that extra amount is subject to considerable unpredictability – including a potential loss of $16 million in state funds – before a final budget is approved by the full Assembly by June 15. Assisting Rogers with the budget presentation to Assembly members are, from left, Deputy City Manager Robert Barr, City Manager Rorie Watt and Budget Analyst Adrien Speegle.

City budget: More last-minute spending, no new taxes

City budget approved by Finance Committee rejects mill rate increase, adds funds for social programs.

With a few final tweaks that boost spending, cut taxes and rely on an uncertain “gift” from the state to stay out of debt, the Juneau Assembly’s Finance Committee on Wednesday unanimously approved the city’s budget for the coming fiscal year.

All of which actually isn’t that absurd, since the boosts involve relatively tiny sums for things such as helping the homeless and the tax cut rejects an 0.1 mill rate increase included in the draft budget since it was first published two months ago.

And the state “gift” is an allocation the Alaska Legislature-approved during the session that ended just before midnight Wednesday, which city advisers say they don’t believe Gov. Mike Dunleavy will veto.

Also, the budget process isn’t done yet, since the full Assembly — composed of the same nine members as the Finance Committee — has to consider, take public comments on and approve a final budget by June 15.

Still, for city leaders there was some sense of relief after nearly two months of Finance Committee scrutiny that resulted in the current $172.3 million general fund spending plan going from a $3.4 million deficit at the start to a $10.3 million surplus — at least on paper for now.

“For as difficult a budget session as this could have been this went really smoothly,” Assembly member Wade Bryson said as the meeting wrapped up. “This felt a lot less stressed than previous budget cycles.”

The general fund budget for fiscal 2023 is about $28 million lower than the current year, due primarily to the inclusion of large-scale capital and infrastructure projects such as a new City Hall and the reliance on large federal COVID-19 related allocations to cover costs. The total city budget — including all entities such as the Juneau School District and Bartlett Regional Hospital, and all state and federal funding — is about $400 million.

A couple of somewhat offsetting “unknowns” remain. Wage/benefit negotiations for city employees are estimated to cost about $2.2 million, but subject to wide variation. The budget also projects a $2 million carryover from unspent funds in the current budget, which also may vary widely, although in recent years lapses have exceeded that amount.

The big wild card in the general fund budget at this point is if the governor will veto $221 million to state municipalities to make up for five years of short-funded school bond debt reimbursements. In a news conference Thursday, Dunleavy said his administration is reviewing the budget and potential vetoes will be communicated at a later date.

Juneau’s share is $16 million, which gets them out of what as of now is a roughly $5 million deficit with a huge surplus to spare.

Whether the city actually gets the funding will likely be a matter of election-year politics, since a week ago it appeared unlikely due to $5,500 per-person checks the state Senate included in its budget, City Finance Director Jeff Rogers told the committee. But the final state budget approved just minutes before the deadline includes per-person payments of about $3,200 which, keeps the municipal payments as well is more politically palatable.

“We intuit it from our lobbyists that the conference committee action to reduce the dividend … reduced the pressure on the governor to veto things,” Rogers said.

On the other hand, reimbursing school bond debt may not be something voters care greatly about “so it’s still a potential veto target,” Rogers said.

If the municipal funds are vetoed it may affect the willingness of some Assembly to support near-term large-scale projects such as a new City Hall since the alternatives are essentially spending a large amount of reserve funds or significant tax/fee increases.

“For me even though I am in favor of a new City Hall it is not a given I will vote for a new City Hall,” Assembly member Michelle Bonnet Hale said.

The mood of voters also played a role in the most significant action the city’s Finance Committee took Wednesday, voting 5-2 to maintain the existing 10.56 property tax mill rate instead of accepting the 0.1 percent increase city finance officials included in the draft budget.

That results in an estimated $540,000 loss of revenue, but Assembly member Greg Smith proposed maintaining the current rate due to recently skyrocketing property values and ongoing deficits in city budgets that have been overcome mostly by federal/state largess.

“This is to have some cost sensitivity to the cost increase our property owners are seeing as well as put some downward pressure on the budget,” he said.

“It’s good to have the conversation and talk about what we can be doing better and what we can do more innovatively, ” Smith added. “A little scarcity breeds innovation.”

Assembly member Carole Triem, who with Assembly member Alicia Hughes-Skandijs voted against Smith’s proposal, said the loss to the city’s budget that still faces a possible large deficit isn’t a worthy tradeoff for a mill rate adjustment that will save the owner of a $500,000 home a total of $50 annually.

“I don’t think this is a place we address the high cost of living in Juneau,” Triem said. “Given this is something that saves people less than $10 a month, this isn’t the place we are going to see these (budget) savings.”

City Manager Rorie Watt, while not taking a position on Smith’s proposal, noted “lowering the mill rate doesn’t put less pressure on the budget. Appropriating less money in the budget does that.”

“It functionally lowers the fund balance, so maybe it puts pressure on next year, but it certainly doesn’t do it this year,” Watt said.

The vote on the mill rate came after a presentation earlier during the evening about a new online “do-it-yourself” budget tool the public could use to submit their spending plans. Among the most notable results was a strong preference in cutting property taxes (in favor of other taxes and/or spending cuts), which was mentioned subsequently in passing by some Assembly members as they finalized the committee’s budget.

New spending during the evening was limited to a few small “action items” subjected to additional scrutiny during the past couple of weeks.

One is an increase of $264,600 for the Juneau Community Foundation, which provides grants to a wide range of philanthropy causes, essentially to help efforts to reduce homelessness. The amount is half of what city finance administrators recommended, but Smith was among those seeking to reduce the amount because of the city’s ongoing deficit spending.

Bryson was among those opposing the reduction, arguing it’s a pay-now or pay-later situation.

“While I do understand we’re going to be facing budget challenges in the future, the community has overwhelmingly asked us to deal with the homeless crisis we are facing,” he said.

The vote to fully fund the increase failed by a 3-4 vote, with Bryson, Hughes-Skandijs and Hale in favor. Smith, Triem, Assembly member Christine Woll and Assembly member Maria Gladziszewski voted against. Mayor Beth Weldon and Assembly member ‘Wáahlaal Gíidaak Barbara Blake were absent from the meeting.

The committee also approved $141,000 for the Southeast Alaska Association for the Education of Young Children, which provides support such as child care to needy families, with a provision added by Smith that the association will reimburse some or all of the amount if an application for a federal grant to help with such programs is approved.

The full Assembly is scheduled to begin considering the budget at its Committee of the Whole meeting June 6. Meanwhile, the Finance Committee is nixing plans to meet next Wednesday following the long hours the administrators and politicians logged in their respective roles.

“We think it was a good process this year,” Rogers told Assembly members by way of thanks as the final budget meeting ended, noting “we get the benefit of sitting over here and not having to make those decisions.”

“We’ll do everything we can to make next year’s process a little bit better,” he said.

Contact reporter Mark Sabbatini at mark.sabbatini@juneauempire.com.

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