City Manager Rod Swope told the Assembly at its retreat Tuesday the prediction of a $7.5 million overall deficit over the next two years is holding, and part of the plan to deal with it is by not filling vacant positions.
Swope said during this budget deficit he has no plans for layoffs and will not consider them unless the Assembly directs him to do so.
Per city charter, the manager drafts a two-year budget for the Assembly and it is then adopted. Swope is in the process of working on that budget for Fiscal Year 2013 and 2014 with the finance director.
Swope said Finance Director Craig Duncan has been spot-on for how much property tax revenue to expect. Swope said retailers did slightly better this past year, but not much.
Swope said that 80 percent of the city operating budget is in personnel.
“When you’re facing a problem like this, that’s where you’ve got to go,” he said. “Something we have done, we have really tightened down on filling vacant positions. As I’ve indicated here, we’re not filing them unless someone can come to me and demonstrate that position is critical. Kim and I are not popular these days.”
Swope said the cost benefit of holding those positions open is immediate, which will help the city prepare for dealing with the deficit.
Swope said these decisions are hard on departments.
“You can’t expect them to do more with less,” he said. “There’s a point at which you completely demoralize your staff. I’ve also tried to emphasize you have fewer people, you have to get creative and figure out what you can’t do. The city needs to recognize that and accept that. That’s going to be a way of operating through the budget shortfall.”
Swope said the city is looking at every department in terms of the services they provide.
While he is comfortable making decisions on keeping positions open, Swope said the Assembly will need to make the decisions on service cuts.
Swope said some ideas could be to shut facilities like libraries or recreation areas down for a portion of the week, or they could adjust bus services or shut down non-essential city offices twice a month.
“Those are services we provide to the public that may be impacted,” he said. “I don’t feel comfortable making those decisions. I want to identify those and list them out. I will be coming to finance with those. I want to be up-front, it is our responsibility to make fairly good progress in addressing these budget deficits.”
It is possible some of that impact could come from budget reserves. Swope said during the last deficit, which was about $8 million, the state covered half of it from revenue sharing. The city paid for the rest with tobacco tax revenues and reserves. Swope said he actually only had to use $200,000 from the reserves and the rest of the $2 million approved to be spent from the fund went back.
Assembly member Karen Crane said the Assembly needs to have a discussion about the school district as well. In the past the city has held the district “harmless” during budgeting — meaning the city funded it to the maximum allowed by law per-pupil and contributed additional funds for activities. The school district last year faced its own $4.3 million deficit due to stagnant state funding, discontinuation of short-term federal funds and declining enrollment. Early indicators show another deficit is likely this year.
Crane said that with this $7.5 million city deficit, she doesn’t know if Juneau can afford to maintain the same level of funding with the schools and suggested the Assembly look early on how it wants to have that discussion with the district.
Assembly member David Stone said he would hope everything would be on the table for discussion — from schools to other expenditures.
Swope said as budget discussions continue, they will take a look at what services could be impacted, what the cost savings would be and how that would affect the citizens. Some service reductions could mean an outright elimination, or others would be offered less often than people are used to.
In other business, City Engineering Director Rorie Watt reviewed several big projects in the works within the city, and also reviewed a Capital Improvement Project list.
The list was compiled of all possible options that departments may present for the temporary 1 percent sales tax. Voters will need to approve extension of the tax, and its allocation for specific projects.
Watt said some projects have merely been mentioned as wishful ideas while others are more clearly developing projects.
They include reconstructing the north terminal at Juneau International Airport, finishing the snow removal facility at the airport, construction of Bartlett Regional Hospital’s adolescent treatment center, a learning center facility at Eaglecrest Ski Area, a Lemon Creek fire station, multiple Docks and Harbors projects, Mendenhall Valley library construction, a scaled-down performing arts center, reducing the debt service, West Douglas road construction, Centennial Hall, renovation of municipal facilities, a parks and trails package from Parks and Recreation, artificial turf for baseball fields and accelerating the addition of curbs and gutters to valley streets.
Mayor Bruce Botelho urged the Assembly members to not commit support to any of the projects until they have heard them all. He said it would be a disservice to the community to make decisions before all proposals are in.
Not all of the projects can be funded, as 1 percent of sales tax amounts to $8 million a year on average.
• Contact reporter Sarah Day at 523-2279 or at email@example.com.