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Tax revenue falling short of projections

Juneau looks to curtail spending as city faces a $1 million shortfall under trend

Posted: Thursday, November 20, 2008

Sales tax money for city operations is coming in below June projections, and if the trend continues, the city could be about $1 million short of what was expected, the city's finance head reported Wednesday to the Juneau Assembly.

Finance Director Craig Duncan's revised projections are based off revenue reports from July through September, a time period that coincides with much of the tourist season and bad news in the national economy.

"At this point, we are looking at curtailing spending," Duncan said.

Specifically, City Manager Rod Swope said he's asking his staff to cut down on unnecessary travel, to save energy and consider holding vacancies open in anticipation of tough economy. Swope also alluded to the city's yet-to-be-implemented plan for additional transit services.

"Things are going to get tough. It's going to get real tight," Swope said. "I'm telling staff right now, we need to hold the line."

Duncan added that about $1 million of unexpected revenue is coming to the city treasury from a national timber program that was renewed and another federal program, though Swope warned of other city revenue sources that may also take a hit because of the weak economy.

For example, falling residential property values are hitting property tax projections in the 2010 budget year, Duncan reported, to the tune of about $912,500 by June 2010, assuming tax rates don't change. Swope added that the city's recycling program will generate less because the market for recycled materials has dried up. Plus, low oil prices may mean less money from the state, and the city's old projections had included new mining operations that have since stalled.

The city's general government budget, which doesn't include enterprise operations such as Juneau International Airport and Eaglecrest Ski Area, is about $96 million. Sales taxes make up 27 percent of it and property taxes another 43 percent.

"I know we don't take a hit as fast as the Lower 48, but I'm worried about this one. It's coming at us fast," and local shops are closing, Assembly member Merrill Sanford said. "I'm very nervous."

Mayor Bruce Botelho said this wasn't the first time he'd seen a significant downturn in Juneau. In the mid-1980s - Botelho was an Assembly member at the time - economic problems forced job cuts in state government, causing an exodus in Alaska's capital city and ripple effects in the local economy and government.



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