Summary: It was finance director Bob Bartholomew’s last Finance Committee meeting after seven years on the job, and it was a number-driven one. The Finance Committee recommended some ordinances that will allow for funding of Juneau International Airport’s north terminal rebuild, it also recommended a creative change to utility rates.
Jones said he plans to come to the August meeting with a proposed schedule for additional Finance Committee meetings.
The possibility of a priority-driven budget is being discussed. It’s a system that attempts to rank services by priority and uses those priorities to shape a budget.
“I’m not opposed to additional meetings,” Edwardson said. “”One thing I’d like to add is discussion of the process.”
For example, he said discussing the pending and increment list to earlier in the budget-making process could be helpful.
Weldon said at some point the Assembly will need to take a close look at cutting some services.
Gladziszewski agreed that it will need to be something that’s considered.
Jones said it would make sense to have an extra Finance Committee meeting each month in the fall — September, October and November — to help identify budget priorities.
The committee is discussing ways to create a more sustainable budget.
The conversation comes in light of an adopted operating budget in which expenditures are greater than expected revenue and a handful of looming major projects, including a proposed new city hall, a new Juneau Arts & Culture Center, Centennial Hall renovations, school maintenance work and addressing child care needs.
If the rate change recommended by the committee does ultimately get approved, it will mean a monthly increase of $5.20, Rogers said. But that increase would coincide with a $4 hazardous materials fee falling off bills.
So, the actual impact felt by most people paying water bills will work out to be a $1.20 increase, Rogers said.
“I think Mr. Bryson’s solution is brilliant, and I’m ready to vote for it,” Hale said.
Bryson made his idea into a motion, and Hale did exactly that, but not before a lot of discussion about the specifics of Bryson’s proposal.
The 4-percent increase would go into effect in January 2020, and the first 2-percent increase would come in July 2021.
Becker objected to the proposed increase.
Weldon asked Rogers what the increase means for monthly rates at the end of the 5-year period. Rogers said rates would be $146.80, which is slightly less than what a 3-percent rate increase would mean for residents.
The motion passed 8-1 with only Becker voting against it.
Jones said reminded the committee the rate change will be back before the Assembly as an ordinance, and it will get a public hearing.
Weldon and Assembly member Maria Gladziszewski each have floated out the idea of a 4-percent increase for wastewater and a 2-percent increase for water rates.
Assembly member Mary Becker has thrown her support behind the 2-percent increase.
“I think we have a solution that solves everything,” Bryson said. “The first increase we do 4 and 4. The other three increases we drop down to a 2-percent increase. so it’d be like six years of increases but accomplishing it in five years.”
Assembly member Rob Edwardson said utilities definitely need to be funded. He said the 2-percent increase may be the most fair to residents if the Assembly also dedicates more sales tax to water and wastewater.
Almost every member of the Assembly seems to be on the same page: No one wants to pass on a higher rate increase, but no one wants failing infrastructure.
Assembly member Carole Triem said she’s concerned opting for a 2-percent increase would be “kicking a can down the road.”
She said a 3-percent increase in January may be a good middle ground.
Assembly member said he leans toward a 2-percent increase in the interest of not increasing the cost of living.
“We have the chance to reduce their water bills by $175 if we go with the lower rate,” Bryson said.
He said the increase would still help support utilities without putting too much burden on residents.
According to the meeting’s information packet: Current combined utility rates are $130.40 per month. After five consecutive years of a 4-percent increase the rates would be $158.65 . With a 2-percent increase that ending figure would be $143.98.
Previously the Utility Advisory Board recommended water and wastewater rates be increased by 4 percent in each of the next five years to provide an additional $750,000 per full year. That increased revenue would be used for maintaining and improving aging infrastructure.
The UAB also recommends a $5 million annual capital improvement project investment in both utilities for a total $10 million CIP investment annually in utility infrastructure
In April, City Manager Rorie Watt recommended a rate increase of 2 percent in each of the next five years. That plan would allow for an additional $4 million investment for each utility.
Assembly members have expressed concerns about increasing the cost of living for residents but also for the need to support water and wastewater infrastructure.
“I too am concerned about adding costs,” said Assembly member Michelle Bonnet Hale. “That concern doesn’t take away from a need for a balance. That infrastructure is not going to stop needing what it needs.”
After diving into the financial weeds to talk airport funding, Jones called a break until 6:30 p.m.
It gave me some time to talk to Bartholomew to get a better handle on how funding for the north terminal project breaks down.
The city was previously authorized in 2012 to sell $6.9 million in general obligation bonds to support the project, but only $1 million worth of bonds were sold. So $5.9 million will come from that.
The Assembly could decide to authorize up to $18 million in revenue bonds to support the project, too. Those bonds would be repaid via passenger fees and federal grants, Bartholomew said.
The Assembly can also approve ordinances that would allow for the transfer of $1.1 million from the airport’s fund balance and the sales tax fund balance to pay for the project’s expected shortfall.
Appropriating ordinances for both transfers were approved with direction to use the the sales tax fund transfer as a last resort.
Mayor Beth Weldon asked what happens to the city’s sales-tax-funded support for the project if bids for the project come in lower than expected.
“Do we use less sales tax or do they use less fund balance?” Weldon asked.
Bartholomew said different funding sources could be prioritized by Assembly direction.
“The followup is what if it comes up overbid?” Weldon asked.
Bartholomew said then finance director Rogers would come back with a plan. The response drew a laugh.
He said to increase general obligation bond totals, they’d need to hear from voters.
“One thing that helps here is we’re not remodeling a building, that’s where you have a lot of variables, the goal here is to tear down the building and rebuild,” Bartholomew said.
He said the project will be put out to bid in August of September.
Discussion has focused on the issuance of general obligation bonds that will be used to pay for the project, and bond ordinances that need to be amended to allow money to be spent on the airport. It sounds like those bonds would be paid back by FAA grants and passenger fees.
Assembly member Loren Jones noted this is the last Finance Committee meeting for finance director Bob Bartholomew, who will be passing the baton to incoming finance director Jeff Rogers.
Jones said there will be some refreshments to mark the occasion in between the end of regular business and a scheduled executive session.
Juneau International Airport is pursuing a rebuild of its north terminal, which for the most part was built in 1948, according to the Finance Committee’s meeting packet. The latest cost estimate for the project is $23.4 million, which is about $1 million more than is committed to the project.
To address that shortfall, the committee may decide to direct the transfer of $800,000 from the airport fund balance to the project and transfer $300,000 of sales tax fund balance to the project.
Tonight’s Finance Committee agenda features the proposed terminal rebuild at Juneau International Airport, revisiting the topic of changing utility rates to improve infrastructure and discussion of building a sustainable budget.
• Contact reporter Ben Hohenstatt at (907)523-2243 or firstname.lastname@example.org. Follow him on Twitter at @BenHohenstatt.