Next year’s city budget forecasts high levels of just about everything — numbers of cruise ship passengers, sales tax revenue and hotel bed tax revenues, City and Borough of Juneau Assembly members were told Wednesday night as the 2024-2025 municipal budget was introduced.
However, just like most residents, City leaders will also grapple with the same unpredictably high inflation that has driven the cost of just about everything up in Juneau and across the country.
Wednesday night marked the first in a series of weekly meetings in which various aspects of the city’s spending plan will be reviewed and determined by Assembly members and city officials to build the framework of how Juneau will spend its money.
Though things are likely to change, here are key takeaways for what the $457.4 million budget looks like — for now.
It expects high sales tax and high cruise ship passengers
After a few years of historically low cruise ship passengers coming to Juneau — largely due to the pandemic — the city expects to bounce back to pre-pandemic levels or beyond as the proposed budget assumes 1.6 million cruise ship passengers will come to Juneau this summer.
With that forecast, multiplied by the $5 fee charged to each cruise ship passenger that enters the city, the marine passenger fee revenue is budgeted at a record-breaking $8.25 million.
The forecasted sales tax is no different — the city expects $70.4 million in revenue.
That includes the city’s 5% sales tax rate ($65.7 million), tobacco tax ($2.8 million), alcohol tax ($1.3 million) and marijuana tax ($480,000).
Hotel bed tax is expected to total $3.42 million.
It decreases the mill rate to the lowest it’s been in more than three decades
The city’s revenues derive from a number of sources, a major player being the funds generated from property taxes.
This year, the borough’s total assessed property valuation (including both residential and commercial properties) clocked in at around $6.5 billion — a 13% growth compared to just last year.
To put it in perspective, according to city data, in 2020 the median assessed value for a home in Juneau was around $429,000. In 2022, the median was around $527,000 — that equates to a 23% increase in just two years.
However, assessments are just one piece of the puzzle that determines what property owners see on their tax bill, the mill rate is the other major factor.
According to the proposed budget, given the substantial increase in property value, the city is considering a historic reduction in the operating mill levy — commonly referred to as the property tax rate — bringing it down to the lowest it’s been in more than three decades (10.28 mills) down from 10.56 last year.
According to the city manager’s budget message, the proposed mill rate “generates only enough property tax to pay CBJ general governmental costs after consideration of a $1 million lapse.”
According to the budget, the proposed mill rate would generate $65.3 million for the city (including debt service) which is an increase of around 10% over what was projected last year.
It proposes putting $10 million aside for a new City Hall
Voters rejected a ballot proposition that asked whether the city should take on $35 million in bond debt to fund the construction of a new City Hall —but not without much conversation.
City officials say many benefits would come from building a new City Hall given that the current one is one of the most expensive municipal buildings for the city to maintain costing $800,000 annually for the city to rent out.
The previously proposed City Hall would have cost around $41.3 million, but the proposition was narrowly voted down and thus the city is back to square one.
Now, the city’s proposed budget includes putting aside $10 million of the city’s unrestricted fund balance to be used in the future for a new City Hall, whatever that may look like.
In a previous budget cycle, the city put aside $6 million from general funds to go toward a new City Hall, so this $10 million proposal would be an addition to that ($16 million in total).
The budget also includes appropriating $50,000 for the city to “educate Juneau voters on the long-term benefits of a New City Hall,” according to a statement in the city manager’s budget message.
It calls for increased funding for all major yearly expenditures
The bulk of the city’s spending goes toward a few key areas: the Juneau School District, city enterprise funds (hospital, airport, dock and harbors), general governmental funds, capital improvement projects and the city’s debt service.
All of those major components are proposed to see increases in funding which, according to city Finance Director Jeff Rogers, is largely necessary to offset forecasted inflation among other factors.
“It’s mostly related to inflation and additional funding to the district and program funding and a few additional positions,” Rogers to the Empire.
New city positions proposed in the budget include adding an additional full-time commercial appraiser, a full-time information technology business analyst and two part-time positions in human resources.
It banks on the state doing its part
The state of Alaska plays a couple of key funding roles for the city, largely its obligations to school bond debt reimbursements and community revenue sharing.
Rogers told Empire he isn’t too worried about the state not fulfilling those obligations as the governor’s current budget fully funds both areas — though nothing is final as of yet.
Additional finance committee meetings to review the proposed budget are scheduled for April 12, April 19, April 26, May 3, May 10 and May 17.
• Contact reporter Clarise Larson at firstname.lastname@example.org or (651)-528-1807. Follow her on Twitter at @clariselarson.