Anchorage forecasts budget deficit for 2015

Devin Kelly

The administration of Anchorage Mayor Dan Sullivan, forecasting a budget deficit in 2015, is asking department heads to cut budgets by 0.5 percent before the end of the year.

Lucinda Mahoney, the municipality’s chief financial officer, sent a letter to departments earlier this month citing an expected deficit of $7 million. She recently told an Assembly committee that the figure was “very preliminary” and is expected to decrease, but the administration currently expects a deficit of some size for the upcoming year.

With more than five months remaining before the end of 2014, it’s not clear a deficit will actually materialize. Several Anchorage Assembly members said they were skeptical because past deficit projections ultimately turned into surpluses. But Sullivan said in an interview that his administration is being cautious.

“It’s a process of departments examining to make sure we don’t have any surprises in 2015,” Sullivan said.

Mahoney’s letter, a copy of which was emailed to Alaska Dispatch News by Assembly member Dick Traini, instructs departments not to cut personnel or impact services but to find other ways to save money, such as delaying equipment orders. The letter also tells departments that had expected new or increased spending in 2015 to look for further savings to “make room.”

Earlier this year, the Assembly took a $13 million budget surplus and approved spending of $4.8 million in property tax relief and $2.5 million for school resource officers. That one-time spending for ongoing costs led to the projected deficit, Mahoney wrote in the letter. The Sullivan administration had recommended putting more than half of the surplus money into savings.

Assembly member Elvi Gray-Jackson, chair of the budget and finance committee, said the Assembly’s decision to fund school resource officers was necessary.

“We took the cost of the SROs from the School District and put it in the operating budget where it should have been,” Gray-Jackson said.

Top municipal officials, including the police and fire chiefs, are required to submit their budget changes by Aug. 1, according to Mahoney’s letter. Sullivan is scheduled to meet with each department to review the changes in August before submitting his budget to the Assembly in early October.