By SHANNON HAUGLAND
Sentinel Staff Writer
The Assembly is winding up work on the city budgets for fiscal year 2025, which are on the agenda for approval as ordinances at Tuesday night’s regular meeting.
City finance director Melissa Haley said the general fund budget for the year starting July 1 “is increasing the level of service, but it’s very dependent on the revenue coming in, which is very dependent on sales tax.”
New programs in the general fund include taking over Blatchley Middle School swimming pool operations, the cost of maintaining the buildings in the school district, establishing the position of tourism manager in the budget, funding major street improvements, and adding funds for operating the Performing Arts Center.
Also on the agenda for Tuesday’s meeting is a supplemental budget ordinance adding $35,000 to this year’s budget for replacing a 300-hp outboard engine for the city harbor maintenance boat.
The Assembly will also consider a property tax exemption for the Youth Advocates of Sitka property at 3411 Halibut Point Road; appointments to city commissions; and for applying for a clean energy grant.
The Assembly also will take up a matching grant program for bulletproof vests for the police department. The final item is on approving a 20-year historic preservation covenant on the Japonski Island boathouse.
The meeting starts at 6 p.m. at Harrigan Centennial Hall.
City Budget
City Administrator John Leach’s letter on the general fund budget for the coming year says it represents a 14.6% increase in expenditures over last year. It shows an expected surplus of $43,620.
“The budget assumes we have 97 percent staffing levels. However in the current year it’s much lower than that,” Haley said.
The finance department historically has built a budget on the conservative side. The city finished fiscal year 2023 with a general fund surplus and in September transferred $4.5 million into the public infrastructure sinking fund, which will help fund the FY25 capital budget.
The Assembly has been working with city staff on the budget since the beginning of the year, and has considered not only funds needed to operate each department, but resource proposals from city staff and Assembly members for new programs and infrastructure.
“As tourism continues to flourish in Sitka, we recognize the need for strategic investments to accommodate growing visitor numbers while preserving our natural and cultural heritage and sense of community,” Leach says in his budget letter. “This budget proposal includes resources to ensure that the impacts of tourism are balanced and that benefits are shared throughout the community.”
The letter notes the importance of a diverse economy, supporting the fishing industry, capital expenditures and projects that align with the city strategic plan. Another section is dedicated to “vulnerability.”
With the school district making cuts and still facing shortfalls, the city is helping out by “taking on costs that have historically been the school district’s burden,” the administrator’s letter says. The city is also adding funding for recreational services, following community requests.
This has been possible because of the growth in sales tax. But Leach cautions that the current level of spending may not be sustainable.
“Because an increasingly large portion of our revenue comes from sales tax and so much of our sales tax comes from our visitors, there is a significant risk that the current funding levels for highly desired services like our parks and recreation program, local education, and investment in infrastructure will not be maintainable should initiatives limiting tourism impact our sales tax revenues.”
City sales tax comprises around 50 percent of all revenues coming into the general fund.
Leach also noted the threat of litigation related to limiting tourism would also add to costs, both in money and in time that could be spent on other initiatives.
“While we hope that we can fully implement this budget that makes such significant strides in delivering the services the community wants and needs, we must be aware of the potential impacts of this looming threat and be ready to react to safeguard the municipality’s resources,” he said.
Rate increases for utility operations are included in the budgets now up for final approval. Some projects in the budgets are for replacement of aging infrastructure, including the sewer force main replacement projects that will require the city to take on $6 million in new debt with a low interest state loan.
The Assembly and staff have talked at previous meetings about “unfunded mandates” that are adding to costs in enterprise funds. In the last few years, those have included requirements for secondary water filtration, and additional wastewater treatment.
Rate increases for water, electric, wastewater and solid waste are anticipated to add an average of $13 per month to utility bills, with lower rates in the winter than summer.
Fund increases are:
Electric - no rate increase, but increases to the customer fee.
Water - up 4%
Wastewater - up 8.25%
Solid Waste - up 4%
Moorage rates are going up by 4%, which is lower than anticipated. City Finance Director Melissa Haley said the focus in the harbors, in order to keep rates down, has been on extending the life of harbor assets, rather than total replacement.
If passed on first reading Tuesday night the ordinances will be up for final adoption on May 28.
Other Business
Other items on Tuesday’s Assembly are:
–– reappointment of Trish White to the Local Emergency Planning Commission and Shauna Thornton to the Port and Harbors Commission.
–– third and final reading of a community purpose property tax exemption to Youth Advocates of Sitka, for their property at 3411 Halibut Point Road, a house for homeless youths. The tax amount exempted would be $5,417.40.
–– a resolution to apply for reimbursement of up to $3,500 for bulletproof vest purchases.
–– first reading of an ordinance to purchase a replacement engine for utility vessel Stray Current, shared by the harbor department and the electric department. The cost is $35,000.
–– an ordinance to appropriate $500,000 for a clean energy project. The project will be funded through a contract with the Department of Energy to support city staff time and contracted and purchased services to improve the efficiency of Sitka’s hydropower systems.
–– a 20-year historic preservation covenant for the Japonski Island boathouse. The city owns the property at 1490 Seward Avenue, where the boathouse sits. The city leased the property to the Sitka Maritime Heritage Society in 2005 for 20 years, with three 10 year extensions, available through mutual agreement.
“In that time, SMHS has successfully raised funding, obtained grants, and recruited volunteers to restore the Japonski Island Boathouse,” the staff memo says. “As a part of these efforts, in 2023 SMHS applied for and received a grant from the National Park Service Maritime Heritage Preservation Fund which requires a historic preservation covenant to be placed on the property.”
There are a number of stipulations, including maintaining architectural and historical features; obtaining the permission of the state historic preservation office “before undertaking any demolition, construction, alteration, remodeling, or ground disturbing work that could affect the historic or archaeological features/resources of the property.”
