Anchorage Mayor Ethan Berkowitz introduced his 2016 budget to the Assembly on Friday. It’s $1.8 million less than last year’s final budget of $484.3 million, but that number came after the administration scrabbled to close a significantly larger deficit.
The presentation had two major take-aways.
First: The administration is dealing with about $11 million less in revenues, and a good deal of the day’s presentation by Office of Management and Budget Director Lance Wilber covered ways to make up that difference.
Number two: This is just just the first move in a much longer chess game over the budget. Berkowitz compared it to h’our d’ourves ahead of dinner.
The administration won’t have specifics on reductions within departments until it formally presents its budget on October 16th. But for the last three months staff has looked for places to trim.
“A lot of this was just wringing nickels and dimes out of particular departments and finding more efficient ways of getting things done,” Berkowitz said.
The administration is trying to grow the size of the police force and fire department by about 30 positions–no easy task as the municipality grapples with a $4.8 million loss in state Revenue Sharing funds, and another $7 million hit from the end of a dividend paid out by ML&P.
The question is: Where does one get the money for more cops and firefighters without growing the budget?
Part of the answer: Oil money from the pipeline that has been locked up in litigation over property-tax valuation of the Trans-Alaska Pipeline System. The administration views money set aside from valuation disputes as fair-game for its operating budget, rather than funneling it towards one-time capital expenses.
“It’d be like you not paying your house taxes for a couple years: It’s operating money,” Berkowtiz said. “Because you haven’t paid it over a period of time, there’s a backlog.”
$4.5 million of litigated funds is put towards the 2016 budget. That’s a concern for fiscally conservative Assembly members like Jennifer Johnston, now in her ninth and final municipal budget cycle.
“If this is a one time only, then maybe it’s a Band-Aid that we could live with,” Johnston said. “But you can’t use it for precedent-setting, because it’s gone as soon as you spend it.”
The other problem is that the TAPS valuations are years out of step: The money that the Administration would apply to the budget is for years 2007-2009 of production. Since then, the price per barrel has plummeted, and will mean diminished pipeline property-tax funds just a few years out.
There’s also a 4.3% increase across the property tax base, although that amounts to less than 2% for individual home-owners. According to Wilber the bump translates to about a $50 increase for a $300,000 house.
The other notable measure Berkowitz is using to close the gap is halting the SAP software project. In August the administration announced a pause on implementing SAP, effectively removing 16 salaries from the year-to-year budget, many of which went to consultants, not municipal employees. They’re also reducing 12 positions from different departments–some of which are currently vacant, but a few will mean lay offs. There is no word yet on where exactly those cuts are going to be.
The devil is in the details. And at such an early stage in the budgeting process those are still on the way.
“It’s a beginning,” Johnston said, “there’s not a lot you can get out of it.”
The Assembly has until mid-November to digest the mayor’s budget, then come back with amendments of their own.