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The Juneau Assembly decided Wednesday to add $4.1 million to the city budget, potentially avoiding layoffs.
Assembly members provided City Manager Rod Swope with $2 million of tobacco tax revenue and $2.1 million of the rainy day fund over the next two years to address the city's remaining deficit.
Though the Assembly does not have to legally finalize its two-year budget until June, unless projections change, it looks likely it will avoid laying off eight to ten employees, the originally planned course of action after its largest employee union, the Marine Engineers Beneficial Association, voted in January not to defer a contractually negotiated 3 percent raise for one year.
The tobacco tax, which voters approved in the fall elections and which took effect Jan. 1, is predicted to bring in an additional $1.17 million per year. Prior to the increase, the tax brought in and the city allocated a little more than $500,000 to the Rainforest Recovery Center and social services.
The city's "rainy day fund" is currently at $9.2 million.
The Assembly voted unanimously for Assembly member Jeff Bush's motion to use $2 million from the tobacco tax over the next two years. The other projected $400,000 in tobacco tax revenue would be used for additional social service programs, to be determined in the coming months. Bush specified that he was placing no limitations on how one defines "social service."
Assembly member Bob Doll motioned to use $2.1 million from the rainy day fund to address the remainder of the projected two-year deficit.
"If we do this, we have four more two-year budget cycles we could use this for. I think that's prudent," he said.
Doll, Bush and Assembly members Merrill Sanford, Jonathan Anderson, Ruth Danner and Johan Dybdahl voted in favor of using the rainy day fund.
Assembly members Randy Wanamaker and Finance Committee Chair David Stone voted against it. Wanamaker said he was not for or against the idea, but thought it was premature. Stone said he worries about the city's financial future.
"I'm not the optimist that some of you folks are about the future," he said. "I'm very concerned about how we leave the city behind when I'm gone, and who's going to have to inherit this. Philosophically, I have a really hard time tapping the rainy day fund that much, (though) I understand this is not the final decision."
Mayor Bruce Botelho was absent.
The city has reduced its projected budget deficit significantly over the last year, when the Assembly first began discussing it.
In February of 2009, the city's Finance Department predicted the budget could be $11.4 million. Since that time carryover from the current financial year, higher than expected property assessments, higher than anticipated returns on investments, and millions of dollars in cuts to city budgets reduced the projected deficit to the $4.1 million the Assembly discussed Wednesday.
If the projections change for the worse based on future data, Assembly members agreed to discuss reductions in personnel, whether through layoffs, attrition or, possibly, mandatory furloughs, and possible reductions to the school district's budget as ways to address it. Finance Director Craig Duncan said the city should have fourth quarter data for the calendar year in 10 days.
"You (Swope) have done an incredible job in terms of the reductions. You have truly cut things down to the bone in many different areas. I wouldn't want to see more cuts without it coming back to us to thrash it out," said Anderson.
Bush emphasized that the budget includes no increases in funding for schools or personnel.
The city currently budgets $25.8 million for the school district, $800,000 more than it is legally required to. That legally required amount is likely to change during the current legislative session.
"We gave the manager at least some sort of certainty," said Stone after the meeting.
He said the Assembly will consider smaller, more detailed aspects of the budget in the coming months.
Contact reporter Mary Catharine Martin at firstname.lastname@example.org.