The former City and Borough of Juneau Finance Director warned that we are in an “unsustainable budget situation after heading out 3 years,” in a May 15 Finance Committee meeting. How did that happen?
The current Finance Director noted that the “budgeted draw on fund balance in FY20 exceeds $4.0 million,” in an Aug. 19 memo to the Assembly Finance Committee. Further, the City Manager’s budget message dated July 2 says “the FY21 and FY22 budgets will both spend through additional savings. By the end of FY22, the general fund balance will be drawn down to a level that can no longer accommodate further draws.”
Clearly, the current biennial budget is complicated, but it appears that Juneau’s elected officials consciously decided to spend through savings, rather than make more cuts or raise taxes. This in spite of an Assembly goal set at a Dec. 1, 2018 retreat to “Protect Budget reserves” under #3, Sustainable Budget. Thus, the FY20 CBJ property tax mill rate seems artificially low because it’s unsustainable. What were they thinking?
After all of the state’s problems because elected decision-makers decided to spend down savings rather than develop a sustainable budget, why would the Assembly take a similar approach?
Did the Assembly keep the FY20 mill rate artificially low so that voters would be more likely to approve ballot propositions because taxes hadn’t been raised? That’s speculation, but they’re now rethinking their approach. That’s good, but its post-election timing raises questions.
The Assembly Finance Committee on Aug. 21 proposed a “Financial Sustainability Review” for October/November 2019. Its goals relate to “FY21/22 budget development” and to what CBJ voters can expect in terms of “revenue or expense changes.” What does that mean?
Obviously, tax payers won’t know what that means until after the upcoming election. After the CBJ asks voters to approve ballot propositions that will raise various taxes for several years, budget cuts and more tax increases are most likely ahead. Since accrued savings are almost gone, CBJ’s elected officials and others will face unavoidable, difficult, budget-balancing decisions.
Since all budgets involve trade-offs, the best way to allocate scarce resources is to look comprehensively at all operating and capital requests to set priorities, beforehand.
Money can only be spent once; by spending it one way, it can’t be spent any other. If voters approve the ballot propositions on Oct. 1, these decisions will have been pushed forward and prioritized ahead of future budget cuts and tax increases that cannot be avoided much longer.
The question remains: when presented with an unsustainable budget, should voters approve ballot propositions before they know what other budget cuts and revenue hikes they’ll face?
What lies ahead for property owners, other tax payers, and all residents once the Assembly begins more realistic and comprehensive long-term financial planning for Alaska’s capital city?
What future state budget impacts are “in the pipeline,” what about gubernatorial vetoes? In times of increasing uncertainty, shouldn’t voters be cautious when substantial unknowns exist?
Voters have made some poor choices in past national, state, primary and local elections; choices they later regret because they lacked timely, relevant information. Will the Oct. 1 local election be one of those times or should voters decide only after they’re fully informed?
• Mike Clemens is a former State of Alaska budget analyst and retired administrative manager. He’s been a Juneau resident since 1970.