Normally the Juneau Assembly sets the municipal budget two years in advance. This year, that will be hard with so much uncertainty in state funding and the economy.
Despite anticipating nearly $4 million less in state support, city officials are proposing a relatively flat budget for the next fiscal year and a placeholder budget for 2018.
If the state’s budget is a hurricane, Juneau could be in the eye of the fiscal storm next year.
“What we’re seeing is, we have roughly, you know, a $330 million budget and the difference between 2016 and 2017, it’s basically two-tenths of one percent,” said City Finance Director Bob Bartholomew.
He said the city has been preparing for a fiscal cliff. It cut more than $3.5 million from its budget over the last three years. The city also lost about 20 staff position during that same time period.
“We reduced tax exemptions for sales tax on both businesses and individuals. We raised tobacco tax revenues and then we merged two city departments, and we had a lot of other program and efficiency reductions.”
City departments shouldn’t be losing any staff this year but Bartholomew said the relative calm of a flat budget will likely be over by the time the 2018 fiscal year rolls around.
The budget for that year is a placeholder and will likely be reduced as state funding continues to drop.
“When we talk about FY18, which is really when we’re going to start having to address the next round of loss of revenues, we’ll have three options: We can reduce costs, we can raise revenues, and we can use savings. We expect that we’re going to have to use all three of those tools.”
Some changes will be made between the city’s revenue and spending. For instance, the current budget proposal is to fund the Juneau School District to the maximum allowed by state law, in this case, $83 million. That’s down from more than $85 million last year and could drop even more by 2018.
“That has to do with how the formulas have evolved during the year. We had the change in student population; the change in assessed values all coming into a formula on who pays for school funding. The state will be paying $2 million less, we’ll be paying, give or take, $100,000 more.”
In committee, the Juneau Assembly also decided against lowering property tax rates.
The city is expecting to bring in about $49 million next year from property taxes. That’s $1.8 million more than last year. That increase in revenue is, in part, due to a significant jump in property values, Bartholomew said.
The city is also expecting to lose $450,000 in sales tax revenue next year.
The assembly is scheduled to meet Monday at 7 p.m. Bartholomew said public input during the process could be valuable now, but will also be useful in the fall when the assembly begins to discuss the budget for the following year.
“I think what’s important for the assembly and management to know is just, what areas do people think things are not working and they need to be improved? If we start getting into a situation where we have to reduce our expenditures, what areas should we be looking at first?”
The agenda for Monday’s meeting has not yet been set, but Bartholomew said he’ll be surprised if its members choose not to vote on the budget. The school district’s budget must be approved by May 31, and the assembly won’t meet again until June.
