Daily Sitka Sentinel

City Figures Impact Of Governor Vetoes

By SHANNON HAUGLAND
Sentinel Staff Writer

The city finance staff was reviewing the governor’s line item budget vetoes today for possible impacts to the city’s fiscal year 2021 budget.

Some of the cuts did not come as a surprise, including hits to Community Assistance and school bond debt reimbursement, said City Controller Melissa Haley.

“There are other things that impact the budget, but those are the direct hits,” she said.

On top of those impacts, local officials are concerned about the effect of the COVID-19 pandemic on city finances.

“Because of COVID, it’s not just that we’re incurring new expenses, the big impact is projected reduction in revenues,” Haley said.

Rep. Jonathan Kreiss-Tomkins’ office sent out a list of the vetoes to municipal, school, tribal and community leaders in his legislative district, showing cuts to the Alaska Marine Highway System, K-12 and pre-K education, and Medicaid, among other programs.

“The governor justified many of these cuts by saying that the $1.25 billion the state will receive from the federal CARES Act will be used to supplement the programs,” said the email Kreiss-Tomkins aide Kevin McGowan sent to scores of local officials in District 35.

“For many of the cut items this is unlikely,” McGowan said in the email. “Section 5001(d) of the CARES Act requires that these federal funds are used for expenditures incurred during the COVID-19 disaster. Obviously, items like school bond debt reimbursement are recurring and not exclusive to the COVID-19 disaster.” 

Haley noted that the situation regarding the disaster relief money is changing by the day, and it’s not known at this point what will and will not be eligible for COVID-related federal funds under the Coronavirus Aid, Relief and Economic Security Act, also known as CARES.

City Administrator John Leach said he’s attending an Alaska Municipal League teleconference today to discuss concerns and strategies for accessing CARES Act funding.

Haley said the finance staff anticipated the cut in Community Assistance funding in its current draft of the FY21 budget, and used a conservative figure of $376,000.

The city had also anticipated a 50 percent cut in the city’s entitlement in the school bond debt reimbursement program, and put that figure ($839,000) in the 2021 budget now being drafted. The Legislature passed a budget with full funding, but the governor vetoed the whole amount.

Haley said one way the city can cover the shortfall is to delay the sunset of the 1 percent seasonal sales tax. (Voters more than 20 years ago approved the 1 percent seasonal sales tax to fund bonds for school construction. The special tax will sunset when the bonds are paid off.) 

“We can carry it a year, and still be OK,” Haley said.

“We planned for the worst case scenario, the most conservative budget, when we put the figures together,” City Administrator John Leach said.

(See related story on the vetoes’ impact on the school budget.)

From Kreiss-Tomkins’ office, McGowan noted that most legislators returned to their home communities after the legislative session was recessed over a week ago, and that it’s unclear how the Legislature will proceed over the coming weeks.

After Dunleavy made massive cuts in the budget passed by the Legislature last year, they simply sent him a new budget, with many of his cuts restored, which he signed.