The city’s operating budget will be about $12 million in the red over the next couple years, the City and Borough of Juneau finance department predicts.
At its Wednesday night meeting, the CBJ Assembly finance committee heard an update from city finance director Bob Bartholomew, who announced a predicted $4.9 million shortfall at a Committee of the Whole meeting earlier this month.
Since then, his staff has found that although the FY2015 shortfall will be $4.9 million, the FY2016 deficit will be an additional $7.1 million, bringing the total to about $12 million.
Bartholomew said the numbers he presented at the earlier meeting were “very preliminary ... it was probably worse than that.”
His department missed the extra $7.1 million because it hadn’t yet run the numbers through the city’s budget system. Creating the early rough estimate was “basically an attempt to accelerate the process (by) producing information outside of our budget system,” he said.
According to Bartholomew’s report, the budget deficit grew after previously negotiated and allocated wage and benefit increases were added.
It “drove the numbers to be a significantly higher need-slash-shortfall when we prepare the 15/16 budget,” he said.
Two major factors led to the shortfall: declining budget fund balances and no city property tax or sales tax growth, the budget report stated.
A portion of the existing fund balance is going toward $3.1 million in wage and benefit increases. And although the FY2014 budget predicted a 2.5 to 3 percent increase in sales and property tax revenue, actual revenue is higher than it was in 2013 but about $1.5 million below budget.
According to the report, the city is predicting no change in tax revenue for FY2015, and a 1 percent increase in FY2016. Tourism is expected to decrease by 2 to 3 percent.
City Manager Kim Kiefer, along with Bartholomew and his staff, is tasked with balancing the budget, and provided a list of scenarios to take away from the shortfall.
Ideas for saving money included using the rest of the city’s fund balance and budget reserve, raising property tax rates by varying degrees and making significant cuts to city services and programs. Kiefer presented four options which can be found online at www.juneau.org/clerk/ASC/FC/2014/documents/BudgetShortfallPacket.pdf.
Some members of the Assembly voiced concerns about cuts to services and programs. Assemblymember Kate Troll asked if “very real programs will be going away.” Kiefer said that, because city government has been funded at a flat rate for years and is down to the essentials, it’s time to make “major cuts.”
“We’ve been ‘little-piecing’ since 2009 and we don’t have any little pieces left,” Kiefer said.
She said she’ll immediately begin to put together a list of potential cuts.
“What that list will be I’m still working on to get to the dollar figures,” she said.
Committee chairwoman Karen Crane said everything — including the school district and Eaglecrest Ski Area budgets — should be considered for cuts.
“We have to factor that information into everything we’re receiving,” she said. “As far as I’m concerned, everything is on the table.”
Kiefer will present a balanced budget to the Assembly finance committee — including details on which city services and programs could be cut — on April 2. The final budget must be adopted by June 15.