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Assembly members present bleak economic outlook

Cuts coming, and they may be more noticeable than previous cuts, one tells local public retirees

Posted: December 9, 2011 - 12:09am

One City and Borough of Juneau Assembly member on Thursday said looming budget cuts “may be more noticeable” than previous ones, while another predicted a decade of tight city budgets

Assembly Members Karen Crane and Ruth Danner gave an overview of where the city budget currently stands to the Retired Public Employees Association (RPEA), though they couldn't provide updated information since the city manager and staff are working on the next two-year budget plan. They said the Assembly traditionally doesn't see that kind of information until March. Crane is the chairwoman of the city Finance Committee.

Crane said in the last budget cycle, the city also faced an unexpected shortfall and had to use a combination of "rainy day" funds, tobacco tax revenues and cuts to avoid layoffs.

"As the city manager says, the low-hanging fruit has already been picked," she said. "The next series of cuts may be more noticeable to the public than the last ones. I can’t tell you where those cuts are going to come from."

The looming deficit for the next cycle is from a decrease in sales tax revenues, low interest revenues and some state and federal funding sources ending.

Crane said some people say the city budget has just grown and grown.

"There is much more to the borough than they think about when they think about the budget," she explained. "When someone says the budget has grown, it has, but where has it grown? It has grown in areas primarily where the citizens of Juneau have voted for."

Crane said people tend to think there are too many public employees, and while that perception may still be debated by the public, she points out those larger numbers aren't in the core of city jobs. She said there are roughly 1,800 staff that work with city in some capacity — 500 work at the hospital, 800 at the school district and other staff work in departments considered to be enterprise funds (like the hospital), which is expected to make revenue.

"I do think the reductions over the next two years are going to be difficult," Crane said. "We’re hoping to have a lot of public input as we go through this process. ...We hope this is not the only time we’ll hear from you."

Danner said the $7.5 million deficit is just "small potatoes" to what they could be looking at. She said in her personal opinion the fiscal climate is likely to be worse over the next decade.

Danner said if a plan for a pipeline were in place and ready to go today, it would still be 10 years before anyone saw revenue from it. She said the same of several other economic development projects.

Danner also said it was important for the older sector of the population to get involved and give their opinions, because they are a growing sector. She showed graphs of percentages of people age 65 and older in Juneau. In 1990 that group represented 5 percent of Juneau's population. In 2010 that was 8 percent. By 2024 it's expected to more than double to 18 percent.

"I want us to design a future that will accommodate us all and the whole community so that we can continue to grow and prosper here," she said.

Both Assembly members said everything will be on the table for consideration when looking at what to cut to balance the budget — including school district funding, to small grants to organizations like Perseverance Theatre.

They said that it basically comes down to two options — increase revenues via taxes (likely an unpopular choice) or make service cuts.

Some members of RPEA suggested if the city had to raise taxes, that they should do it in property taxes instead of sales tax, since there is a federal subsidy for property taxes.

One suggestion that came from the group was to seek community input via some sort of contest for finding the most creative ways to cut down the projected $7.5 million deficit over the next two fiscal years.

“We’ve got 30,000-plus eyes and brains,” the woman suggested.

Another member said she sees a lot of little things around the city that could be done to cut costs. She said that there was a period when the street sweeper came by her house twice a day for months. She had asked why and the answer was to keep drainage clear further down the road. Another woman shared a story about an unnecessary street light that she eventually got the city to remove.

“I think we all see small things that waste money,” one member said.

Another suggested a closer look at raising the sales tax in the summer.

"If we raise it in the summer, it’s not only the tourists that pay it, it’s everybody," Crane said.

One member suggested the city look at ways to cut consumption of fuel oil and look into reimbursement grants for converting to renewable energy sources. Another said the city also needs to take a closer look at energy conservation when they build new projects.

Another member expanded on that, asking the city to evaluate long-term costs of new projects. She said she really hasn't seen the city do it much, but each project should include costs of maintenance and employee costs per year once built.

Some members also wanted change with the city's investments. They wondered if the city could model the Permanent Fund or other groups who are making money in the markets. Danner said the Fund's investments are online, but she explained the way it invests is different from the way the city would have to invest, but some form of it could happen if there is public outcry for such a change.

• Contact reporter Sarah Day at 523-2279 or at sarah.day@juneauempire.com.

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