the state of the city 2013 - sitka mayor mim mcconnell

By Mayor Mim McConnellMay 1, 2013

Greater Sitka Chamber of Commerce Presentation

*State of the City

“Providing for today… preparing for tomorrow”

*Overview

• FY14 Operating Budget

• Our Strengths

• Plans for the Future

• Comments and Questions



*Overview

*We’re in amazingly good shape compared to other cities around the country and in Alaska.

*The City and Borough of Sitka has been operating in the “Black” for years.

*Our unemployment rate in 2012 was a low 5.6%.

*Sales and Bed tax revenues have slightly increased.

*We have a motivated citizenry interested in creating a healthy, sustainable community.


*FY14 Operating Budget

Decision points to make and a fresh perspective.

*What level of sustainable governmental services are you willing to pay for?

*What level of support are you willing to provide the School District?

*As a community we need to holistically look at all critical needs together (education, public safety, social services) as opposed to only within the confines of each institution.

Future Balanced Budgets


City expenses are increasing from:

* increased health insurance costs,

*and general costs of doing business that everyone else experiences.

*We are currently undergoing collective bargaining negotiations with two of the three unions representing the Municipality's employees. The outcomes of these negotiations will have an impact on overall Municipal wages and benefits that we will need to accommodate. We also have some employees not represented by unions and we must also provide for equitable wages and benefits for them as well.


Expenses


Other impacts to the Budget:

*School District increased costs and reduced revenue impact the City budget. The School Board chose to take $900,000 out of reserves which is unsustainable beyond this year.

*Municipal infrastructure continues to rapidly age.

*Costs are increasing while our municipal revenues are basically flat; much of this is due to severely shrinking State and Federal assistance.


Expenses



*The FY14 budget has been balanced by severely curtailing spending on infrastructure repairs.

*Key appropriations that should be made in FY2014 for repairs have been deferred.

*This is unsustainable and costly in the long-term.

Cuts



*We will continue to adequately provide for a multitude of basic and special services for our citizens.

*While some service levels may be reduced, no major municipal service areas have been eliminated in their entirety.

*Should actual revenues fall short, then we will be at the decision point to consider expense reductions possibly including decreased staffing.

Cuts



*The City staff and Assembly are addressing under-funding of several of our sinking funds.

*Various Master Plans call for future fee increases.

*Rate increases will be seen for water, wastewater treatment, harbor, and electric (partly for bond covenants) utilities.

Planning



*The City and Borough uses the Climate Action Plan and adopts its recommendations when feasible.

*The Assembly has had two visioning sessions during the current fiscal year and plans to continue working on goals that were identified.

Planning



*Blue Lake Hydroelectric Dam project: largest infrastructure project in the history of the City and Borough of Sitka.

*Replacement of ANB Harbor;

*Renovation of the Centennial Building and its parking lots;

*Resurfacing of the airport runway;

Major Infrastructure



*Construction of a new breakwater in the Western Channel;

*Resurfacing of our State Highways, both HPR and Sawmill Creek Rd.

*These projects are funded from various sources, Federal, State and Local, and all are expected to provide a short term stimulus to our local economy.

Major Infrastructure



Consolidated Operating Budget contains operating budgets for

*Sitka General Fund and Permanent Fund;

*8 Enterprise Funds (Electric, Water, Waste Water, Solid Waste, Harbor, Airport Terminal, Marine Service Center, and Sawmill Cove Industrial Park);

*3 Internal Service Funds (Management Information Systems, Central Garage and Building Maintenance);

*4 Special Revenue Funds (SE Alaska Economic Development, Revolving LID Fund, Guarantee Fund, and Library Endowment);

*1 Fiduciary Fund (Rowe Trust);

*all Capital Projects Funds;

*and the Sitka Community Hospital.

Funds



*Each Enterprise Fund and Internal Service Fund of the City and Borough is a separate and distinct business element and should stand on its own financially.

*The General Fund should finance the expenditures for general government services in line with projected revenues.

*Each operating budget has been balanced for FY14, through a combination of operating revenues, expenditure reduction, and working capital balances.

Financial Philosophy



*The overall financial condition of the City and Borough of Sitka is projected to remain satisfactory, with an adequate level of combined working capital (both restricted and unrestricted) for all of its funds.

*Cash flow and liquidity is also projected to remain satisfactory.

*General Fund and six of our Enterprise Funds – Electric, Water, Waste Water, Solid Waste, Harbor, and Sawmill Cove Industrial Park – have insufficient revenues and working capital to provide for the long-term maintenance and replacement of their physical plants.

Financial Condition



*Needed repairs and infrastructure replacement will continue to require a combination of increased user rates and debt financing.

*Of greatest concern is

* the rapidly declining condition of our municipal road system and our inability to financially keep pace with the costs of repairs.

*Other significant concerns are the potential loss of State funding sources for water and wastewater infrastructure repairs coupled with insufficient working capital to finance such repairs internally.

*The City and Borough retains a sufficient level of general obligation bonding capacity in order to meet future needs.

Financial Condition



*The Administrator submitted a balanced budget which includes reduced Federal and State of Alaska revenue and no new taxes or service fee increases.

*Federal and State revenue sources are becoming even more uncertain.

*The ballot measure in October asks to have two old school bonds currently paid for out of the General Fund be paid for from the 6% sales tax.

Revenue



*A property tax levy of 6 mills, unchanged from last year, is being budgeted again this year; this is the current maximum allowed by the Home Rule Charter.

*Sales taxes will again be levied at 5 percent, adjusted seasonally to 6 percent from April thru September with the extra proceeds dedicated to school-related general obligation debt.

Taxes and Other Revenues



*Sales taxes are anticipated to rise by 2.36% in comparison with fiscal year 2013 projections;

* this rise is due to the increase of the taxable sales tax limit to $1,500 per transaction,

*and, to the removal of the sales tax exemption on alcohol and tobacco sales to senior citizens.

*Municipal Revenue Sharing (no Supplemental Revenue Sharing this year) and School Bond Debt reimbursement by State of Alaska.

*Interest revenue earned by the Revolving and Guarantee Funds.

Taxes and Other Revenues



*The General Fund budget is essentially balanced, with a minimal excess of revenues over expenditures ($38.00).

*Reduction of the Capital Improvements Program will lead to increasing levels of deferred maintenance which will create greater financial difficulties in the future.

*No new taxes or tax increases have been planned for.

*It has not been planned to utilize any of the General Fund balance (i.e. reserves) to balance the budget.

Balanced Budget


*Our Strengths

*We’re an island community that appreciates resourcefulness and being good neighbors.

*We’re good at volunteering in all aspects of our lives whether it’s health and wellness, sports, the arts, reading, learning, investing, the list goes on.

*Sitka’s not-for-profit community is alive and well, providing millions of NEW dollars worth of jobs and services to Sitka and beyond.

*Downtown Revitalization is happening.

*Affordable housing and a shelter are works in progress.


*Our Strengths

*We have a thriving Sheldon Jackson Campus with the Sitka Fine Arts Camp and its Campus partners with science, music and arts programs that are world-renowned.

*A City-wide Branding/Marketing Project with Signage Solutions is in the works.

*The City and Borough and Sitka Tribe of Alaska intergovernmental relationship is in good working order.


*Our Strengths

*The historical nature of our town contributes to our community’s sense of place and is recognized around the world, drawing visitors that contribute to our economy.

*The City has created lots of construction & job opportunities.

*We have exceptional municipal services and dedicated City and Borough employees.

*Our economy has its challenges but we’re in pretty good shape.

*We can keep it that way, and improve it, by working together and planning for a better tomorrow.


*Plans for the Future

*Hire a new City Administrator.

*Adopt the ordinance that creates the Health Needs and Human Services Commission.

*Discuss ways to increase City and Borough revenue and reduce expenses through a multi-faceted approach, including visioning and operational planning combined with financial analysis.

*Develop our economy by finding new ways to environmentally and sustainably “provide for today and prepare for tomorrow.”


*Comments and Questions

*Please read the handout that is on your table for more details concerning the FY14 Operating Budget. This is the Budget letter written to the Assembly by Jim Dinley and Jay Sweeney.

*The next Budget worksession is tomorrow, 6pm and will cover all the enterprise funds. The following week will be on the General Fund.

*If you would like to contact me about ideas for the future or other issues, I can be reached at [email protected]

Phone: 747-2860 or 738-2888

or on Facebook: www.facebook.com/mim.mcconnell

mailto:[email protected]

the state of the city 2013 - sitka mayor mim mcconnell

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