Anchorage Mayor Ethan Berkowitz on Thursday said the city has closed out the books on 2015 with a $14 million budget surplus, which he described as largely the result of spending cuts and higher-than-expected revenues.
But Berkowitz warned that the effect of the savings on the current 2016 budget is still unknown. He said that uncertainty about the state's fiscal situation, along with other legislation in Juneau, including potential changes to public retirement contributions for cities, will affect how much of the savings can be used for property tax relief and how much would be needed for other uses.
The city is preparing to revise the current budget and set property tax rates.
"We, like the private sector, are somewhat held hostage to the (Legislature's) failure to come to a resolution," Berkowitz said in a presentation to the Anchorage Assembly's budget and finance committee. "There are decisions we can't make because we don't know what they are going to do."
Variables include cuts in state revenue sharing and the possibility the state will increase the amount of Anchorage's contribution toward the public retirement system, Berkowitz said.
The budget for 2016 is the Berkowitz administration's first spending plan, and the projected surplus comes after warnings of an $11 million deficit last fall. The Assembly passed a $481 million operating budget in November that cut spending but also raised property taxes to make up the gap.
Shortly after taking office July 1, and expecting a deficit in 2015, Berkowitz asked department heads to cut their spending by 2 percent. In addition to spending cuts, city revenues exceeded expectations by roughly $4.5 million, said city budget director Lance Wilber.
Meanwhile, two recent legal settlements boosted income by about $2.8 million, according to Wilber.
At this point, the Berkowitz administration recommends using the surplus for a combination of property tax relief and bolstering the city's savings. Wilber told Assembly members during Thursday's presentation that the administration is considering using some of the money for one-time spending on things like homelessness programs.
Berkowitz said the outcome of two initiatives on the April city ballot will affect the amount of property tax relief provided by the city. He said the city may have to come up with a "contingency plan" if a tax proposal to pay for Girdwood law enforcement fails.
Berkowitz also took a critical view of a ballot initiative to change the phrasing of the city's tax cap calculation, reversing legislation passed last October by the Assembly. The initiative, Proposition 8, would force the administration to cut its budget by $1.4 million.
"If that passes, it severely constrains our ability to give out property tax relief," Berkowitz said.
Berkowitz said the initiative, which has been a rallying point for conservative candidates in Assembly races, reflected "competing visions" about Anchorage's future and its budgeting.
"Are we going to be a vibrant city that has an adequate-sized police department? Are we going to grow? Are we going to have flexibility that's necessary?" Berkowitz said. "Or are we going to make our budgetary decisions based on political bumper stickers?"
Assemblyman Bill Evans, the only member of the Assembly's conservative voting bloc who attended the budget presentation, said he was encouraged by news of the surplus. Evans said he didn't immediately have ideas for how the surplus should be used, though he said public safety would be a priority.
Evans also said he disagreed with the mayor on the impact of the tax cap initiative. The calculation method mandated by the initiative was used by the previous mayor, Dan Sullivan, and still led to property tax relief, Evans said. Sullivan is one of the co-sponsors of the ballot initiative.
The administration's revised budget proposal will be introduced to the Assembly on April 12. The Assembly will hold a public hearing on the proposal April 26.