The Assembly Finance Committee took a deep dive into city revenue sources Wednesday, in the first of several meetings meant to get a handle on the city’s fiscal situation. The reason for the intensive sessions is that the city’s funds are on the decline and some tough decisions are ahead for the Assembly.
A combination of school maintenance, child care, repairs to Centennial Hall as well as school bond debt reimbursement (not helped by state budget cuts in that area) are going to create some hefty costs in the next few years, according to a report from the Finance Department.
The city isn’t in danger of going bankrupt, (a “healthy” $16 million in the general fund) but at current revenue and expenditure rates the city’s general fund will be depleted to the point the Finance Department says is the minimum for sound financial management, according to a Fiscal Sustainability Overview report crafted by the Finance Department.
But while the city still has money, the main message of the meeting is that some “tough decisions” are ahead, according to Finance Department Director Jeff Rogers.
Currently the general fund sits at about $16 million, but if present trends continue the fund will be down to around $5 million in fiscal year 2022, according to the Finance Department. The city’s accountants have said that’s as low as the general fund should go if the city wants to remain in good financial standing.
The city’s general fund is where revenue from things like taxes and fees are collected. These funds are used to pay for city services and employee salaries.
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Finance Department Director Jeff Rogers led the Finance Committee through an hourlong presentation Wednesday night, accompanied by a packet with more than 60 pages of information on the city’s revenue sources.
“Because CBJ’s budget path has become unsustainable, staff recommends that the Assembly Finance Committee commit committee time to a thorough budget review in August and September of 2019,” the report reads.
Wednesday’s meeting on revenue will be followed on Oct. 9 with a meeting on expenditures. The meetings, part of a series of six, are designed to guide Assembly members as they decide where to make cuts and raise revenues.
“You are tonight seeing about one half of the question, and that’s the question of revenue,” Rogers told the committee. “The Assembly would likely need to make adjustments on both the expenditure and revenue. We’ve worked to give you a view to work through what will be challenging.”
Rogers told the Empire in an interview that the Assembly had decided to take action on the revenue/expenditure problem sooner rather than later, and requested a thorough review of city finances.
The committee was walked through revenue sources and a series of projections of possible future fiscal situations. Projections of the city’s finances were done by San Francisco-based PFM Group Consulting and are available from the city’s website.
Rogers ran the committee through their revenue options.
“Tonight was all about showing our Assembly at some level of detail where our revenue comes from,” Rogers said, “what level of control they have over revenue if that’s something they want to do to pay for priority programs.”
The committee looked back at previous Assembly recommendations for revenue from 2015. Those items included raising sales taxes and removing certain tax exemptions.
“Every revenue and every exemption has a logic and a constituency,” City Manager Rorie Watt told the Empire after the meeting, “and they are hard to change.”
The Finance Committee will be reviewing city expenditures at its next meeting and the Finance Department has urged the Assembly members to prioritize which programs and services they wish to preserve.
• Contact reporter Peter Segall at 523-2228 or psegall@juneauempire.com.
