While city officials are anticipating a financially tough year ahead, they're also preparing to spend $2.8 million in unexpected sales tax revenue that's accrued from years past.
In recent weeks, City Manager Rod Swope has made three proposals to the Juneau Assembly and its committees to spend the extra money:
$1.4 million to offset scheduled water and sewer utility rate increases
$1 million to help pay for an energy-saving, ground-source heat pump at the future Dimond Park Aquatic Center
$400,000 to help pay for a resistance channel at the same future aquatic center
"That cleans it out," Swope said at an Assembly committee meeting Monday.
All three proposals have been supported at the committee level, though none of them have been through public hearings before the full Assembly, which is required for final approval. The Assembly's next scheduled meeting is Monday.
These proposals follow warnings from Swope in November to anticipate several city revenue streams shrinking, including sales taxes, property taxes, recyclable commodities, and state revenue sharing with municipalities.
The extra $2.8 million came from a temporary 1 percent sales tax that was in effect for 33 months. This sales tax was approved by voters in 2005, expired in October and is paying for the Downtown Transit Center and parking garage underway at the corner of Egan Drive and Main Street, improvements to Statter Harbor in Auke Bay, sewer line expansions and a new chairlift at Eaglecrest Ski Area, expected to open next season. These projects are all fully funded, city Director of Finance Craig Duncan said.
The temporary sales tax was expected to raise $18.5 million for the projects, but actually raised $21.3 million, Duncan said. Sales tax revenue grew faster than projected and soaring construction costs also were factored in when the sales tax was conceived, Swope said. Since then, the economy's woes and a precipitous fall in oil prices have put construction costs in check.
"At that time, inflation was killing us. Every project was coming in way over budget. That's why we have surplus," Swope said.
Using the sales tax money as proposed would keep water and sewer utility rates flat for a year. Utility officials had sought an increase of $56.01 to $58.25 for sewer service and $23.06 to $23.41 for water, an extra 3.3 percent collectively. Swope said keeping the rates flat was a way of returning the money to taxpayers.
The other two proposals for the excess sales tax money are both intended to improve the long-term financial footing of the future Dimond Park Aquatic Center. The ground-source heat pump, estimated to add $2 million to the $19.8 million base price for the two-pool facility, may save $160,000 to $190,000 per year in heating costs. And consultants have said the $1 million resistance channel, which is basically a pump that generates an artificial current in part of a pool, would encourage attendance and increase revenue, therefore improving the bottom line of the center's operating budget.
Other agencies have found the two items to be worthy additions. The Rasmuson Foundation has granted $500,000 to the city for the resistance channel and the Alaska Energy Authority has recommended granting $1.5 million for the heat pump. The latter grant is subject to approval by the state Legislature.
Contact reporter Jeremy Hsieh at 523-2258 or e-mail firstname.lastname@example.org.