City and Borough Assembly

ASSEMBLY CHAMBERS CITY AND BOROUGH OF SITKA 330 Harbor Drive Sitka, AK (907)747-1811 Minutes - Final City and Borough Assembly Mayor Steven Eisenbeisz Deputy Mayor Thor Christianson, Vice Deputy Mayor Valorie Nelson, Kevin Knox, Kevin Mosher, Crystal Duncan, Rebecca Himschoot Municipal Administrator: John Leach Municipal Attorney: Brian Hanson Municipal Clerk: Sara Peterson Thursday, December 17, 2020 6:00 PM Assembly Chambers SPECIAL MEETING I. CALL TO ORDER II. FLAG SALUTE III. ROLL CALL Eisenbeisz and Mosher attended in-person. All other members present attended by videoconference. Knox arrived at 6:08 p.m. Present: 6 - Christianson, Knox, Mosher, Nelson, Eisenbeisz, and Himschoot Absent: 1 - Duncan IV. CORRESPONDENCE/AGENDA CHANGES None. V. PERSONS TO BE HEARD Richard Wein spoke to flu mortality rates and of issues related to COVID. He spoke to interest rates, taxes and the increase of those under the poverty line. VI. NEW BUSINESS: A 20-239 Discussion / Direction / Decision on parameters for the FY22 Municipal Budget Municipal Administrator John Leach noted this was the first FY2022 budget meeting and staff was looking for big picture guidance. Finance Director Melissa Haley stated the presentation was a guide and she wanted to first analyze what took place of impacts from past budgets that would affect FY2022. She told of future planned budget meetings. She noted the early decision of the Sitka School District funding that made CITY AND BOROUGH OF SITKA Page 1 City and Borough Assembly Minutes - Final December 17, 2020 the budget process smooth last year. She said that sales tax revenue was higher than anticipated at the beginning of FY2020 but that COVID caused significant reductions and that property tax remained relatively flat. She said that expenses were down in FY2020 compared to FY2019 mainly due to vacancies. She explained the impact of the General Fund balance with regards to the sale of Sitka Community Hospital and its liabilities. She went over non-spendable, committed, and unassigned fund balances. She told of the challenge going into FY2022 with the unknown economic impact of the pandemic beyond tourism giving the example of holiday spending and the online sales tax remittals. Leach pointed out the core services from the Charter and Sitka General Code. He had asked for departments to start with a zero based budget and build it from there with the intent to maintain the same level of services. He touched on centralized procurement and leasing. He told of currently supported items that were not a requirement such as charitable donations, economic development, and social services. Haley explained that a deficit budget may cause decreases in services. Christianson wondered what the process was to use emergency reserves. Leach reminded the current declaration was tied to the state and had a $500K spending limit and that emergency reserves would require a modified economic emergency declaration. Leach told of recent discussions with cruise ship industries, felt they would be back next summer, possibility limited but with the availability of the vaccine, it may increase visitors. He looked at the budget and spending over the past 10 years, and stated the budget had been nearly flat with expenses less than aggregate with an overall decrease in spending. Himschoot told of concerns with maintenance of city infrastructure but belt tightening was good as long as implications were understood. Haley reminded in FY2021 no appropriations were made for funding general infrastructure and noted the higher costs of projects the longer they waited. Leach said that direction was needed for level of services, capital projects, whether to continue existing initiatives, staffing, and special projects. Mosher stated his concerns of using emergency funds and of the many unknowns that could arise in the next couple of months. He would like to have a discussion on services that may be cut. Leach could come back with a budget that maintained the same level of services and could present that, which may cause using reserves. Nelson commented better decisions could be made after sales tax revenue was known for the last quarter of FY2021. Christianson thought to budget capital projects but stipulate that they wouldn't start until next fall by an assembly vote and decisions could be made at the end of the summer depending on revenues. Haley would prefer a supplemental appropriation if revenue was higher than anticipated. She stated public works had put together a list of priorities. Leach was in agreement of a supplemental appropriation later for additional funding if available. Eisenbeisz thought that a lean budget was necessary and to determine later if there were higher than expected revenues. He was not in support of using reserves and would like to see a balanced budget. Mosher agreed. Knox felt it was putting staff in a difficult position asking them to make the call on what services would have to be cut. He thought the assembly should come forward with suggestions. Leach suggested that staff present a budget with the same level of services that offered recommended cuts as necessary with capital projects that were recommended or CITY AND BOROUGH OF SITKA Page 2 City and Borough Assembly Minutes - Final December 17, 2020 prioritized; further decision points could be made after that. Haley stated it was also important to factor in the long-term impacts of potential changes or cuts and told of a future project multiplier which would take into consideration costs of projects into the future. Haley asked for general guidance for Enterprise Funds. She stated the Electric Fund had a 2% rate increase for FY2021, the budget was met, but revenue was down. With the bond refunding done earlier in the year, the fund should be able to maintain the inflationary rate increase. Haley noted that consumption drove rate increases and it needed to be revisited every year. Nelson spoke in opposition of rate increases. Mosher spoke in support of the proposed 2% rate increase. Eisenbeisz agreed with the inflationary adjustment in the past, but was not in support this year. Leach would do his best to keep rates as low as possible and noted that costs increase each year as well but the city would absorb as much as possible. Haley went over the Water, Wastewater, Solid Waste, and Harbor Funds with regards to rate history, future rate changes, working capital and bonds. Leach noted that the Solid Waste Fund may require infrastructure improvements. Knox would like to have running models with infrastructure adjustments and usable life with impacts to revenue. He would also like to look at the Harbor Master Plan. Eisenbeisz reiterated the need to have solid reasoning for rate increases with the exception of solid waste. Haley noted the need for balanced rate increases and gave decision points that needed to be made. Leach stated the need to update master plans and to create a strategic plan which would help dial in future expenses and prepare for upcoming needs. Eisenbeisz supported looking at a long range infrastructure plan and that a strategic plan would be helpful. He agreed that planning was important. VII. PERSONS TO BE HEARD: Richard Wein stated any additional funds could be a supplemental appropriation and a realistic budget was needed. A strategic plan with demographics needed to be included. He told of the need to be independent as far as solid waste and that a comprehensive solid waste plan was needed. He felt that the Secure Rural Schools funding should have been exchanged for CARES Act funding. He said that the city continued to give away money and urged the assembly to look for cuts. He voiced that state revenues would be difficult to obtained and mentioned the proposed Governor's $5,000 Permanent Fund would give a $44M infusion into the city. VIII. EXECUTIVE SESSION None. IX. ADJOURNMENT A motion made by Mosher to ADJOURN. Hearing no objections, the meeting ADJOURNED at 7:47 p.m. ATTEST: __________________________________ Melissa Henshaw, CMC Acting Municipal Clerk CITY AND BOROUGH OF SITKA Page 3