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City will wait for electric bills before deciding spending plan

Posted: Sunday, May 18, 2008

City budget proceedings took an unexpected turn Friday when the Juneau Assembly decided to hold off spending and taxing decisions until after the city has had time to digest sharply increased electric rates.

"We're still working a lot on fear because no one's gotten their bills yet," Mayor Bruce Botelho said.

Residents and business owners have been bracing for electric bills that will be nearly four and a half times higher than normal since avalanches wiped out part of the transmission lines between Juneau and its main source of hydroelectric power. Alaska Electric Light & Power Co., the private-utility that supplies the city's power, plans to send bills reflecting the higher rates on Monday.

At Friday's meeting of the city's finance committee, Botelho introduced his budget recommendations to members of the Assembly. It included most of the recommendations made by City Manager Rod Swope, as well as a reduction in property taxes and some additional spending for other public entities and nonprofits.

The city must pass a balanced budget and set property tax rates by June 15, Swope said.

But Assembly members quickly put the mayor's budget aside for future consideration, saying that it was too early to allocate the city's money when it was still unclear if the city had done enough to help with the new electric bills.

The city has already put aside about $3 million in grants and loans for low-income residents and needy businesses.

But Assembly member Merrill Sanford said that a large swath of the middle class residents weren't being helped by the city. He said the Assembly should hold off on allocating its money until a clearer picture has emerged of how the new electric rate will affect Juneau's residents.

"We need to hold on to all the money that we have," Sanford said. "We don't know how many people are going to fall through the cracks."

Assembly members decided to pass only the recommendations of Swope, which include $54,400 for a Teen Health Center at the new high school and $100,000 for prisoner care costs at Lemon Creek Correctional Center next fiscal year. They also approved increasing the city's budget to pay for the increased energy costs of city-owned facilities, while holding off on making any decisions that would affect property tax rates.

The city's lawmakers also agreed to consider using the city's $10 million sales tax sales tax budget reserve to help offset high electric rates.

Assembly member Jonathan Anderson suggested that the city spend half of the reserve.

But both Botelho and Swope showed an initial reluctance to use that money, saying it was necessary to cover the city's expenses during a catastrophe.

Dipping into it would affect the city's credit rating, and could translate to taxpayers having to pay a higher interest rate on borrowed money, Botelho said. But he added that Assembly members should discuss what constitutes a city emergency, and if the current energy crisis is one.

"I think we should debate that question," he said.

The Assembly Finance Committee's next meeting was scheduled for May 28.

• Contact Reporter Alan Suderman at 523-2268 or e-mail alan.suderman@juneauempire.com.



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