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City's FY12 deficit appears well below budget expectation

Committee also looks at draft schedule for fund allocations

Posted: December 6, 2012 - 1:13am

The City and Borough of Juneau ran up a budget deficit nearly $4 million smaller than what was budgeted in fiscal year 2012, the Borough Assembly Finance Committee heard Wednesday night.

The unaudited comparison of budgeted numbers to actuals has the CBJ general government’s deficit at slightly more than $3.3 million.

Finance Director Bob Bartholomew cautioned that the smaller than expected deficit does not mean the CBJ has more money than anticipated, just that it has to take less out of its budget reserve than was forecast.

“Some people say, ‘Oh, we have an extra $3.9 million to spend,’ but that’s not what that says,” Bartholomew said. “That means we’re $3.9 million less in the hole. So it’s not as good as it sounds.”

The general government fund’s available balance now stands just above $1.6 million, according to Bartholomew’s report.

The adopted FY13 budget aims to chop the general government’s deficit down further, well below the million-dollar mark to $427,000. The approved FY14 budget predicts a $932,000 surplus.

The actual deficit in FY11 was slightly more than $5.9 million.

Expenditures stayed largely flat from FY11 and stay that way in the FY13 adopted and FY14 approved budget, remaining between $83.7 million and $84.9 million in all four fiscal years. Bartholomew said that is no easy feat for the city staff to accomplish.

“We know that in the environment right now, when we hear about the cost of living, we hear about the cost of commodities, what’s going on, that to maintain a flat level of expenditures, there’s a fair amount of pressure having to be applied or things that we’re not doing, because to maintain that level in the face of rising costs is ... a challenge for the manager, it’s a challenge for the department heads, and we’ve been in that mode for several years. And this reflects that,” said Bartholomew.

Mayor Merrill Sanford credited the city staff for controlling expenditures.

“It shows us how we’ve dealt with ever-increasing different things,” Sanford said. “There’s increases every single year no matter how much we hold the line. ... It says nothing but good things about staff and our part of the management team as far as keeping the budget in line to where we’re at now.”

City Manager Kim Kiefer responded by noting that cost-saving measures, such as not filling open city positions and cutting staff training, are already built into the FY13 and FY14 budgets.

“We’re now to the point where we have to stop doing things,” Kiefer said. “There’s no other place to do it.”

The committee also looked at a preliminary schedule of how revenues from the 1 percent sales tax extension and bond issue approved by voters in October will be allocated.

“In short, you’ve got a bit of a complicated problem here,” Engineering Director Rorie Watt, who prepared the schedule, told the committee. “Fourteen projects paid for over six fiscal years, $45 million. You can’t do it all in year one.”

The schedule would allocate $1.55 million for the Juneau International Airport’s Snow Removal Equipment Facility, the public library in Dimond Park and Sealaska Heritage Institute’s Walter Soboleff Center in FY14, among other, smaller project allocations.

“I’ve reached out to the other departments on the list, and the ones that are under control of the manager are happy,” said Watt. He added that the later allocations for Docks and Harbors and Bartlett Regional Hospital projects slated to get sales tax funding fit into those agencies’ project schedules.

Although the sales tax extension takes effect Oct. 1, 2013, Watt said revenues from the extension can be appropriated starting July 1, 2013.

“The sales tax doesn’t go into effect, but you can appropriate that first year on July 1,” Watt said, in response to a question from Sanford.

Kiefer said that maneuver will allow funding recipients to get an early start on their projects.

The $25 million in general obligation bonds approved by voters this fall may also be sold in multiple issues, according to a presentation by Cynthia Weed, partner at law firm K&L Gates, which is the longtime bond counsel for the CBJ.

Watt’s schedule suggests an initial bond sale in February of $2.4 million out of the nearly $25 million total to be issued.

Under the draft schedule, $1 million from that February issue would go toward the renovation of the airport terminal, while the Eaglecrest Learning Center and Aurora Harbor reconstruction projects would receive $500,000 each, Centennial Hall renovations would get $250,000, and other Parks and Recreations projects being funded by the bond would receive $150,000.

Bartholomew said that under the ordinance prepared by bond counsel, the Assembly will reserve the right to set the sale schedule for unissued bonds.

In a special meeting as the full Assembly immediately before the Finance Committee meeting, assemblymembers also unanimously approved a resolution of support for the state to fund the extension of Juneau’s electrical grid all the way out the road.

Assembly approval came in spite of public testimony from Back Loop resident Karla Hart, who said it would be “irresponsible” for the Assembly to approve the resolution without more public hearing.

“People don’t know that this is even going on. It’s been kept very quiet,” Hart argued. She said she feels the resolution was aimed at pleasing “private special interests” and added, “I think it’s way premature for you to be voting on this.”

Sanford responded that the Southeast Conference has been discussing the issue for a while. He added, “There is a lot of support within the community to do something like this.”

• Contact reporter Mark D. Miller at 523-2279 or at mark.d.miller@juneauempire.com.

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