From The Mayor:
City Seeking Ideas
For Making Ends Meet
By Matthew Hunter, Mayor,
City and Borough of Sitka
I have heard from many Sitkans who are feeling increasing financial stress. I feel compelled to share my perspective as an Assembly member with all people in Sitka.
We have fiscal problems that we have inherited and cannot afford to push off to the next generation. Past Sitkans have benefited from years of unsustainable spending on services and infrastructure without paying rates to actually cover replacement costs for that infrastructure. For example, we are now making up for 20-plus years without meaningful utility or harbor rate increases. We have lost much to inflation and are paying the bills for those who preceded us.
Before I was elected to your Assembly, most of the city enterprise funds were barely getting the revenue needed to pay for operations. Very little was being saved for replacement of water pipes, sewers, harbors, electrical infrastructure, roads or buildings. In the past four years we have been forced time and again to either raise rates and bond/borrow for money to replace these critical infrastructure items, or to gamble that they would not break. We have seen increasing numbers of broken pipes and power outages as the things we chose not to fix fail. The seaplane float in the channel actually floated away from its pilings!
We are facing over $20 million in electrical maintenance projects and about the same in water/sewer, and another $20 million in roads this next decade. We have been able to spend about $2 million to keep up with this each of the past couple years, but we really need $4 million to actually address all needs. That is why roads are returning to gravel. This is why rates have increased dramatically these past few years.
About 10 years ago 87 percent of Sitkans voted to build Blue Lake dam. The Assemblies in the subsequent years committed us to building the dam, following the expressed will of the vast majority of Sitkans. When I sat in the audience and watched the Assembly award the dam construction contract (this was about a month before my first term began in 2012), Sen. Stedman and city officials told the Assembly that they projected electric rates to be about 15 to 16 cents per kilowatt-hour. (We are currently at just under 14cents/kWh.) I do not recall any testimony against the dam at that meeting, though about 20 people attended a subsequent meeting and testified about dog poop on ball fields.
My point is that I do not fault anyone for building the dam – we had seen a trend of increasing electrical load growing 3 or 4 percent per year, and projections were that we would be spending millions on diesel to make up for the increased usage. At the time diesel was $3-$4 per gallon and we had not yet had the warm winters we saw in 2014 and 2015. We were told we could either pay $2-$4 million per year in diesel fuel or pay for bonds on the dam. Literally, we could buy a pile of empty oil drums or a dam. That was the perception at the time and given that information, it was wise to follow the citizens’ wishes to build the dam. Now we need to pay for it.
Your Assembly members have made tough decisions in the past couple years. We have made significant cuts to staff: seven city positions (including the first layoff ever) and $1-plus million in efficiencies compared to FY15. Cuts to electric department personnel and possibly others should be forthcoming this year (budget is still being worked out but it will include another $1 million in cuts). We significantly increased the contribution to the school district (by $1 million in FY2017, likely dropping this by $200K to $800K (over FY16) this coming year). We bailed out the hospital with a credit line of $1.5 million when it was literally weeks from closure. While doing all this, the state has cut support to Sitka by over $1 million per year compared to 2015. (This does not include about $800K that we lost this fiscal year in state support for our school construction bonds!)
In short, we have been doing all we can to make cuts that do not decrease services. These cuts have not been very visible, but that was by design! These efficiencies are asking city staff to do more with much less than before. It is because of their efforts that you may not have noticed decreases in services.
There has been a lot of criticism in our community about Centennial Hall and the library. The Centennial Hall project was 100 percent grant funded, and that allowed us to cut our deferred maintenance liability by over $1 million. The library required a new roof, windows, flooring, bathroom expansion, and other improvements totaling an estimated $2.3 million. We used a grant (thank you, Sen. Stedman) and gifts to erase this liability with only $350,000 in city funds. To top it off, both of these buildings now use 100 percent electric heat and still cost 20-40 percent less than they did before their remodels due to energy efficient construction. We are saving money each year because of these upgrades to our buildings.
Other projects folks mistakenly believe the city is paying for include the road to Katlian valley and the Mt. Edgecumbe pool. These are state projects and we have no input. The dock at the industrial park is 100 percent grant funded, and that money cannot be redirected for anything other than a deep-water dock. Other projects that are $100 percent grant funded include rebuilding the Nelson Logging Road, and paving/replacing utilities in both Eagle Beach Road, and Old Harbor Mountain Road. Past projects like the Moller Park ballfield and Seawalk were 100 percent grant funded as well.
As a resident, the most helpful thing you can provide your Assembly is a list of services you would like to see cut. We struggle to find new things to cut as every service has a constituency. We were recently told Sitka supports our senior center more than any other community served by Catholic Community Services – the total cost is about $300,000 annually for our senior vans maintenance and fuel and the building maintenance to this city-owned and -maintained structure. After recent cuts, our Police and Fire Departments both placed workers on mandatory overtime due to short staffing when employees take sick or other leave. The school district is facing uncertainty and cuts from the state each year. The hospital has moments of happy financial news, but it saves nothing for deferred maintenance and cannot survive without the continued city support totaling well over $1million each year (tobacco tax, capital expenditures and maintenance). We support the SAFV Shelter with $50K annually, and cut our non-profit grant awards in half (to $50K).
We are at the point that we can’t have everything, and even as we cut, we still need to raise additional revenue to replace everything the state keeps dropping on us. Last year we had a balanced budget passed only to find out weeks later that the state was no longer going to pay the full cost of housing state prisoners in our jail (87 percent of inmates are held on state charges). The $350K cut continues this year. This money could go toward addressing our deferred maintenance, schools, rate increases ...
We have options. If we stopped plowing residential roads altogether, we would save a few hundred thousand annually. (In some other towns neighborhoods have to contract private businesses to do their plowing.) An all-volunteer fire department would save less than a million dollars per year, but would actually cost lives and raise our insurance rates. Cutting the library a few days a week would save only a few thousand dollars.
Your new Assembly met for a few hours in a visioning session in mid November. We discussed the budget and goals for the year. We cannot do business or vote in work sessions, but our consensus seemed to be to take the following approach in budgeting:
Plan on the electric department being entirely self-funded in two years. (This means at least one more rate increase, more operational efficiencies, and a drive to get more interruptible loads.)
Raise about $1 million in new revenues. You should see two ordinances coming before the Assembly shortly. One raises the sales tax cap to $12,000 (same as Juneau), effective October 2017. Another makes the Senior Sales Tax Exemption a needs-based exemption. (I am not privy to the details yet as I understand it is still being drafted by the sponsors.)
Make $1 million in new cuts this year.
Spend up to $1 million in savings this year. (This allows one more year of subsidized electrical rates.)
I apologize for the length of this letter, but as you can see there was a lot to share. Please think about things you would like to see us cut. We really do need your suggestions. If you think we are wasting money on something, please tell us what it is. Be specific. We need this feedback. Thank you to those who have already shared their ideas. We are strongest when we work together.
To email the entire Assembly, please use: assembly@cityofsitka.org.
If you prefer phone or text, all of our numbers are online. My cell is 738-6851. Leave a message. I will try to call you back within a week.
Thank you for choosing to live in Sitka.
P.S.: Please be nice to our city staff. They are just doing what the Assembly asked them to do.
Sitkans March
Dear Editor: Events of the last few months have left me feeling powerless and somewhat alone when it comes to national political events. I questioned what could be done and how my single voice could be heard. Even my great respect for American-style democracy could not allay my fears of what might be nor could it erase from my mind things that had been said and promised in the campaign.
At the last moment I decided to attend the march in downtown Sitka. With signs and words that were unfailingly positive, what felt like 1,000 of my fellow citizens walked down Lincoln Street showing and sharing what truly makes American great: a positive belief in one another, the knowledge that we are truly free to express ourselves, and the courage to confront what we perceive as wrong.
As I walked my friend Ted to his car, we agreed that what we were seeing across America on Sunday was clearly some kind of a movement. I am not sure that loud, peaceful protests of the size we are seeing can be ignored. Reportedly, there was also a steady stream of people contacting their legislators during the past week. These things, at this volume must be recognized and respected and, yes, accounted for.
The march through our downtown with Sitkans of every age, Native and non-Native, buoyed my spirits and helped me realize that I am not powerless, nor alone. I hope that we can continue to raise our voices, share our concerns, and not lose the soul of our country in a quixotic quest to become “Great Again.” Thank you, Sitka.
Bob Potrzuski, Sitka
Town Hall Requested
Dear Editor: I sent the following request to Sen. Lisa Murkowski, Sen. Dan Sullivan and Rep. Don Young today. Perhaps if enough Sitkans make a similar request, they will actually come.
I respectfully request you hold a town hall meeting in Sitka at your earliest convenience. You most likely know thousands of Alaskans marched, each with their own reasons, but shared together, concern for the direction our state, nation and world are heading. Photos of Sitka’s turnout made the New York Times and Huffington Post.
I appreciate your responses to my calls and your form letters written by staffers on issues that concern me. However, they can not replace a face – face meeting that will allow for dialogue. It is critical we clearly understand your positions on a variety of concerns to include, but certainly are not limited to: affordable health care for all, increasing global temperature impacts and mitigation, public education, renewable energy, and immigration.
Thank you for your thoughtful consideration.
Krisanne Rice, Sitka
