Anchorage

Anchorage faces a grim year as Berkowitz unveils deep cuts in 2017 budget proposal

Anchorage is facing a grim financial year, Mayor Ethan Berkowitz said Friday. The city is confronting increased costs and less revenue than this year, leading to a $38 million gap that he is proposing to fill with cuts, savings and new revenue.

Delays in street plowing, shorter hours at city pools, less maintenance at hockey rinks, longer waits for construction permits and cutbacks in holiday bus service are among the changes Anchorage residents could notice if the budget is adopted, officials said.

Berkowitz's presentation to the Anchorage Assembly linked the shortfall to rising labor and health care costs. Berkowitz also pointed out another big cost: the looming payoff of the city's pricey, drawn-out project to upgrade its business software. The project, known as SAP, is scheduled to be done next June and the city will have to start paying the bill.

The mayor has also blamed state cutbacks for pushing millions of dollars in additional expenses to the city from Juneau.

Berkowitz also wants to spend $3.1 million to put more police officers on the street. The mayor is confronting a higher 2016 homicide rate, worries by residents about safety in parks and on the trails system, and escalating frustration about property crime.

Berkowitz said an upcoming police academy in December will help cover attrition in the Anchorage Police Department. Two planned academies next year will bring the size of the department to between 430 and 450 officers, he said.

The proposed $502 million budget proposal is up from last year's $497 million, in part due to growth in the tax base, Berkowitz said.

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To make up the difference between the spending proposals and a gap in revenue, Berkowitz is proposing deep cuts to city departments and fuel and fleet maintenance programs. City budget director Lance Wilber said those cuts will lead to delays in snow removal.

Cuts are also proposed for overtime for the fire department and staffing in numerous departments.

"These reductions are going to affect service," Wilber told the Assembly at the Friday presentation.

The rest of the shortfall will be covered by revenue projected to flow into the city's coffers, such as new marijuana taxes, according to the overview of Berkowitz's proposal.

A surplus last year will account for additional revenue.

Berkowitz is proposing that the city use nearly $9 million in savings from the 2015 budget to cover the shortfall. That leaves a few million dollars in that savings account.

In April, Assembly members Eric Croft, Forrest Dunbar and John Weddleton co-sponsored a measure that earmarked surplus money for a property tax rebate, if the city was able. During the meeting, Dunbar asked whether that would be possible at this point.

City manager Mike Abbott said he would not recommend it.

The proposed budget translates into a property tax increase of $46 for an average home, or $12 for a home assessed at $100,000.

Berkowitz's budget uses the city's full taxing capacity, which is known as "taxing to the cap." The tax cap grew in 2016, largely as a result of new construction.

As far as money no longer available, Berkowitz and his deputies said that utility regulators last year blocked Anchorage from collecting a dividend from its electric utility, Municipal Light and Power. The administration is challenging that decision.

Assemblywoman Amy Demboski said she didn't think the Berkowitz administration should count that lost revenue in the shortfall. City officials knew the dividend wouldn't be collected, she said.

"It's inflating the number of our budget gap, because some of us never expected it (this year)," Demboski said.

There was also discussion about lag times in snow removal. Dick Traini, the vice chair of the Assembly, said he's concerned about that prospect.

"We're the ones who are going to get calls from constituents who can't get down the road," Traini said. "We are not going to have real happy constituents come this winter."

Abbott said he wasn't aware of any state roads that wouldn't be plowed as a result of cutbacks. The city and the state Department of Transportation are still negotiating a new agreement for who has responsibility over which roads, Abbott said.

He said he expects the city will take on more responsibility for state roads.

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Berkowitz called the proposed budget a "work in progress." He said he'd like to hear the Assembly's ideas on it.

In an interview afterward, Berkowitz said the budget challenges will make it more difficult to pursue his other interests as mayor, on issues like diversity and workforce development.

Berkowitz said he doesn't yet know, for example, where to find the money to continue a series of new city initiatives on homelessness, like a work van program.

The first public hearing on the budget is set for the Assembly meeting on Oct. 25.

Devin Kelly

Devin Kelly was an ADN staff reporter.

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