Mayor proposes $471 million city operating budget for 2014

Anchorage Daily NewsOctober 3, 2013 

Anchorage Mayor Dan Sullivan proposes that the city spend $470.8 million in 2014, down $4.5 million from this year.

His operating budget, released publicly on Thursday, hews closely to this year's, with no substantial cuts. It would slightly reduce the property taxes paid by each homeowner, though citizens would pay higher fees for bus service and ambulance rides.

The budget calls for the city to collect $243 million in taxes, an increase from $237.8 million this year. Collections this year were at the maximum allowed under the city's tax cap, but next year Sullivan wants to keep taxes $3.2 million under the cap.

"Because of the continued sluggish national economy and recent revelations that unemployment and poverty levels are at record highs, I made the decision to keep property tax increases to a minimum," Sullivan said in a written statement released with the budget. "In my mind, every dollar that families can keep to spend on groceries, utility bills or health care costs is money well invested in our community."

Despite the small increase in collections, an Anchorage resident with a $300,000 house should expect to see a $9 decrease in his or her property taxes. That's because a larger tax base will allow the city to collect more money even though individual bills drop slightly, according to Chief Fiscal Officer Lucinda Mahoney.

"How many cities are expecting property tax reductions?" she asked in an interview. "The Sullivan administration has worked very hard over the last four years to obtain a sustainable budget going forward. And to present and to propose a budget in 2014 that is less than 2013 -- that is really significant."

Anchorage's operating budget rose from $294 million to $422 million between 2003 and 2009, during the administration of Mark Begich, or roughly 7 percent average annual growth, according to a calculation by the Daily News.

Sullivan has made a point of trying to slow the rise in expenses, especially labor costs. He has limited budget increases to close to 2 percent since taking office in 2009.

But Sullivan's six-year financial plan, released along with the proposed 2014 budget, says "personnel costs continue to increase at a rate that is not sustainable on a long-term basis."

One of the administration's biggest goals, incorporated into that longer-term plan, is to have employees pay a more "equitable" share of their benefits, especially health care -- though Mahoney would not define equitable.

The city also said it wants to limit the growth in compensation for workers to no more than the rate of inflation, plus 1 percent. That mirrors the language in a controversial change to city labor relations law narrowly passed by the Assembly last spring. That change was recently suspended pending the outcome of a referendum campaign organized by city unions.

Inflation plus 1 percent is an acceptable rate, said Mark McKee, the president of the Anchorage Municipal Employees Association, the city's largest union, which opens negotiations for a new contract this month. But it's acceptable only if the city offers increases that are close to the limit, given that inflation -- using the measure known as CPI-U-- reflects the cost of living for his 525 members, McKee added.

And he said he did not expect the city to do that.

"My milk just went up whatever the CPI-U was, and you're going to offer a fraction of that?" he said in an interview. "How does a person make their bills?"

Derek Hsieh, the president of the city's police union, with 453 members, rejected the administration's target, which he said does not consider what other cities and private security firms are willing to pay.

"Wages and benefits for employees, particularly skilled employees, is not determined by any formula based on a political scheme," he said in an interview. "It is determined by market factors."

Mahoney responded that the city needs to tie its expenses to the amount of money it's able to raise each year.

"We're required to have a balanced budget, and we can't have a balanced budget if a component of our expenditures is increasing at a rate higher than we expect our revenues to increase," she said. "That puts you out of balance."

Sullivan's budget assumes that revenue from the state -- about $18 million this year -- will remain flat.

He proposes to increase ambulance fees by $300, up to $700 and $850 for two different types of service. The fee increase, the first since 2001, is expected to generate an extra $1.5 million in revenues.

Bus fares would also rise, from $1.75 to $2 for an adult, and from 50 cents to $1 for a senior citizen. Monthly passes for adults would rise from $55 to $60, while passes for youth would go from $25 to $30. Senior passes would cost $30, up from $19.25.

Mahoney said the proposed increases are designed to align the costs of running the bus service with its revenues. She noted that property taxes would still subsidize the program. Some of the higher fares would support more frequent service on existing routes, she said.

The proposed budget and the long-term plan assume modest increases of 2 to 3 percent annually in revenues from things like hotel room taxes, fees and permits.

The budget now goes to the Assembly for its consideration.

The budget was released to the Assembly members late Wednesday, but as of Thursday evening, five members reached by the Daily News said they hadn't had time to review it.

The mayor's proposed capital budget, also released to the Assembly Wednesday, includes funding for several big projects, including:

-- $25 million for a new headquarters for the Department of Health and Human services,

-- $8 million for a maintenance shop for the fire department and emergency medical services,

-- $8 million for a Midtown transit facility to replace the current one downtown, and

-- $12.25 million to replace Mulcahy Stadium.

 

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