Anchorage Daily News

PALMER -- As proposed, the Palmer city budget will shrink next year, a sign city officials say reflects belt-tightening and fewer high-dollar public projects.

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Bill Allen

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Both total income and expenses are expected to be down compared to 2008, city finance director Dean Baugh said. Revenues are expected to be $12.97 million, down from this year's $14.62 million. Expenses are expected to be $13.1 million, compared to $15.3 million for 2008.

The proposed budget, which will be the subject of Tuesday's public hearing, also reflects national trends. Baugh is projecting a 2 percent increase in sales tax revenues over last year and a 1 percent rise in property tax revenue. Typically those numbers are several percentage points higher, Baugh and city manager Bill Allen said.

The small projected increase in property tax revenue reflects a struggling housing market and a sluggish market in Palmer overall, Allen said.

"Our property tax base is aging. Unless we can generate some new properties in town, we're going to continue to see a decline," he said.

Allen said he would direct the city forward in economic development plans. But just in case things really tank, he said he has a backup plan. It's a worst-case scenario budget, he said, that shows exactly what it would take for the city to provide the most bare-bones essential services required.

Allen isn't making that budget public and plans to disclose it to the council in a closed-door meeting. He said he hopes it's never used. But, after serving as mayor of the Fairbanks North Star Borough between 1982 and 1985 "when the bottom fell out" of the economy, he said he doesn't want to be unprepared.

Baugh said his sales tax and property tax estimates are conservative, but he hopes that in these uncertain economic times, being stingy will pay off.

"You hear the news every day that people aren't spending and the economy is down. I don't think we've seen that much in Alaska yet -- and hopefully we won't," he said.

Baugh said he's still tweaking the budget to make up for a $172,000 shortfall between revenue and spending. He expects to resolve the difference this month. In the meantime, the city council will hold its second public hearing and begin deliberations on the budget at its 7 p.m. Tuesday meeting in the Palmer City Council chambers.

Allen said there are no big changes in this year's budget. Last year, both expenses and revenue figures were up because the city worked on some large capital projects, such as a $2.1 million reservoir to serve an extended water line built to serve Mat-Su Regional Medical Center. Allen also shuffled the city management team, resulting in at least three new employees.

This year, the capital projects are smaller and two new employees are being considered. One is an electrician whose salary would be offset in savings by no longer outsourcing the work. The second is an administrative secretary for the public works department.

Part of the cutting came at the hands of a new, four-member budget review team who were tasked with recommending cuts. Baugh said being part of a budget team instead of being the lone budget ax-wielder was refreshing.

"I'm sure there were things (cut) that weren't popular," Baugh said. "We had to cut $514,000 out of the budget."

The group, made up of Baugh, city clerk Janette Bower, community development director Sandra Garley and public works lead mechanic Dan Rodrigue came up with cuts in each department, including slicing Allen's travel budget and cutting the city public safety budget by eliminating a requirement for dispatchers to wear uniforms similar to an officer. Now dispatchers will wear fleece jackets with a city logo and the department can cut its uniform budget, Baugh said.

City department directors also worked this year on plans to cut back energy use. The target was 20 percent, Allen said, but a cut of more like 10 percent to 15 percent was realized.

City police officers changed to week-on, week-off shifts that cut down how often they drive their patrol cars and lowered fuel costs. Employees at city hall turn off printers, faxes and computers before leaving for the weekend. People turn out lights when they leave their office for a meeting.

Baugh said the energy cuts are relatively unseen in the 2009 budget because department heads budgeted with rising fuel costs in mind.

"You may not see a big reduction in the budget, but you won't see an increase," he said.

Find Daily News reporter Rindi White online at www.adn.com/contact/rwhite or call 352-6709.

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