Anchorage budget gap expected to expand by $9 million

Posted: Friday, July 24, 2009

ANCHORAGE - Anchorage officials are forecasting an additional $9 million budget shortfall because of an expected drop in tourism this summer and weak returns on the city's investment funds.

Budget director Cheryl Frasca said members of Mayor Dan Sullivan's transition team also expect money collected in fees for city services to be less than projected in the 2009 budget passed by the Anchorage Assembly in November.

Frasca said sluggish tourism means less taxes collected for rooms and rental cars. The amount of money Alaskans will get in dividends from the Alaska Permanent Fund is a factor in the projection for a decline in the collection for city fees, she said. With the dividend lower, that's less money the city can garnish for nonpayment of fees.

The city operating budget passed by the Anchorage Assembly totaled roughly $433 million, but acting mayor Matt Claman announced in January that the budget was $17 million in the hole because of poor investment returns caused by the world's economic meltdown.

Whatever Sullivan does to erase the latest $9 million shortfall will come on top of cuts implemented by Claman that caused rolling shutdowns of a South Anchorage fire station, closed Loussac Library for three days a week most of this summer, and led to several city unions agreeing to push back wage increases scheduled for this year.

Sullivan already has imposed a hiring freeze on city jobs, curtailed travel and restricted overtime.

The new shortfall combined with the one from January represent about 6 percent of the 2009 budget.

Assembly member Jennifer Johnston, who chairs the panel's budget and finance committee, said she hadn't heard any details about the latest deficit, but the news that one exists did not surprise her.

"I knew the deficit was going to be more than we had anticipated," Johnston said. "And I'm afraid it's going to get worse before it gets better."

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