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Discover the heartbeat of Juneau's cultural and community landscape with 'Capital Chat.' This series explores the vibrant world of the community, arts, and dynamic cultural and social events happening in Alaska's Capital City. Tune in to 'Capital Chat' for your essential guide to the pulse of our community, where every story is an adventure and every voice matters.
And now Capital Chat on KINY, where we connect you with Juneau and Southeast Alaska's community organizations only on KINY.
Speaker 2:Joining me is finance chair Christine Wall, deputy mayor Greg Smith, and CBJ engagement specialist Phil Hipshen. Christine, good to see you again.
Speaker 3:Good morning.
Speaker 2:Greg, good morning. Cliff, hello. And, Phil, welcome.
Speaker 4:Good morning. Thank you.
Speaker 2:The Budget. Let's talk about the budget. Okay. So, voters got tax relief, but the reduced recurring city revenue is really the issue that we're gonna have to deal with for the next couple of budget runs. Right?
Speaker 2:First of all, Christine, that's that's due kind of a high level of, some of the big changes that folks will understand that's gonna affect all of us. And then, we'll get into, you know, what that means moving forward. Let me start there.
Speaker 3:Yeah. So, after the election, the assembly got together in December to basically set some direction for how we wanted to deal with that reduced revenue. We asked the city manager to make some pretty big changes to the budget. So, her and her staff, made some, reductions. We reduced a lot of the projects, kind of new projects we were working on.
Speaker 3:We said, let's pause those. $4,000,000 of basically just bite belt tightening around the city, and then some raised revenue. So you'll you'll see a lot of increased fees around the community. So when you go into your your, recreational facilities or if you're putting in a permit, those will be some of the big changes. And then, towards the end of the budget process, the city the assembly basically said we also need to choose some things that we just need to reduce what we do at the city level.
Speaker 3:And so we got a bunch of public feedback, and some of those changes, have been in the news. We saw a reduction to the city museum. We saw reductions to, Travel Juno, to Juno Economic Development Council.
Speaker 5:Yeah. We've decided to sell Mount Jumbo Gym, which is only about a $60,000 a year recurring reduction in expenses. There will if and when it sells, there'd be some more, you know, money coming back in. You said JDC, Travel Juno.
Speaker 2:JEDC, let's talk about them because that that's a relief organization that lends money to small business that can't go their traditional lending route. Right? So, what does it mean for some of the funding that gets cut to them? What does that how does that affect local businesses that might be looking for their their kind of help?
Speaker 5:My understanding is that I think some of those programs, they may already be capitalized. But for the $300,000 reduction, I mean, it could lead to my understanding is this year, it may not lead to, like, loss of staff or their ability to operate some of those programs. That could change if we're not able to raise that grant back up. We usually give about 450,000 a year. My understanding is maybe in the short term, not drastic impacts to that organization and their ability to operate their programs.
Speaker 5:But going forward, we we'll see. It it probably is not a sustainable amount. Or, you know, there would be changes there should we not be able to increase the grant back up. That goes, I think, for a lot of our, the changes and and reductions we made. I do wanna say, you know, we have, predictions on the on the reduction of revenue due to the tax exemptions for food and, utilities, they actually hit pretty close to what what staff estimated.
Speaker 5:Things are still evolving. People are still implementing programs. So I I guess I do wanna say we we made a number of changes and reductions. We knew we were gonna have less revenue. Like, that was clear.
Speaker 5:It takes time to figure out exactly what that is due to lags and sales tax and filing times and all that type of thing. So, you know, a principle of mine that I think was shared somewhat by by others in the assembly, was, okay. We need to make we need to make reductions. If we don't make them, it will make the future worse. But try to try to do as little harm or, I guess, you know, try to do as try to protect some of these things in this current year.
Speaker 2:K. So so to that point, you we avoided closing pools, field house, Douglas Fire Station, that kind of thing. Right? Now, Christine, you mentioned the museum cuts, which is, I think, become the emotional symbol of this budget. How does the budget reduction affect, the museum specifically?
Speaker 2:And then, maybe talk about what this pushes to next year and what that, liability is gonna be.
Speaker 3:Yeah. So, for the city museum, we made pretty significant reductions to to staffing, which will really, impact the the museum's ability to be open to the public. And so there there will be opportunities for the public to access the museum, but, not as much as we currently see. And the idea there was, you know, long term, we know we want we know we have to figure out what to do with the city museum, whether that's, find more revenue that will allow us to to operate it at its current capacity or, figure out something to do with its collection so we can, you know, preserve what we have. And so this is a bit of a, holding pattern for the city museum to make sure that we maintain our collections and give the public some access.
Speaker 3:As Greg said, you know, we we are still waiting on good information on exactly how much revenue was reduced as a result of October. We also made some changes to revenue and that will increase the amount of revenue we have. And we don't exactly know what the impact of those will be either. So we raised the cap of the if you go buy something and it's over a certain dollar amount, you're exempt. And so we raised that cap.
Speaker 3:So that'll have impacts too. So we made some initial decisions, but what I would say is, you know, right now our estimate is that we will still have a deficit of about $8,000,000 a year moving forward. And that's a that's a real big number. I think it's hard for people to kind of visualize what that means. But when we came up with that list that was, you know, in the papers and and in the media that included the pools and the Fieldhouse and reductions at Eagle Crest and others, you know, if you take all those big ticket items and add them together, they do not equal $8,000,000.
Speaker 3:And so we still are looking at, potential significant closures or reductions in the future. We just don't know kind of the scale of that yet unless something changes.
Speaker 2:Phil, the response that, you guys received from the community, the feedback, that type of thing, how instrumental was, all of that, the the online surveys that we did, the the public meetings in informing the decision that needed to be made?
Speaker 4:I think I mean, I don't wanna speak
Speaker 2:for you
Speaker 4:guys, but I think it was very instrumental in your decision making process. The survey that you mentioned, we got a huge response to, I think, over 4,000 responses to that, asking people where their priorities were in terms of what services they think are most important in Juno and where they wanna see their tax dollars utilized the most. I know you guys at several points, like, factored that into your decision making as best you could when you were trying to figure out how to make these, reductions in decisions. So I don't know. I don't wanna speak for you guys.
Speaker 5:I mean, I I would say having that information in the in the process that the engagement team did, was, I mean, critical to know where people felt. And and, you know, during that process, there was a lot of responses like, I actually don't wanna cut many any of these things, but if we have to, here is where, you know, thing here are the things that we would prioritize. And, I mean, it was it was, like, parks and recreation, tourism marketing. I mean, so the things that kind
Speaker 3:of Economic development.
Speaker 5:Yeah. The things that kind of showed up in the in the in the public process and in the engagement process were kind of at the end of the day, things where we did make the most significant reductions. But we, you know, we had set a goal of of cutting 2,000,000 in recurring operating costs through a very painful and, I mean, five, four votes. And, I mean, it was it was tough. I mean, the museum was one example.
Speaker 5:We got to 1.2, and so we didn't quite get to anywhere we needed. But, you know, it was it was tough to get there, and so still work to be done. We used we used one time funds in a lot of cases to kinda help patch the budget together and give us a small fund balance, you know, for things that just come up that you can't predict. But that's just not a sustainable way to go forward.
Speaker 2:Let me ask you about that. So some of the criticism or suggestions have been that the city used that fund more aggressively than they did. Is that even an option, Christy?
Speaker 3:I think we've we've had that criticism over the years, and I think, if you look back, there are definitely times we could have spent more. But if you where we ended up this year, patching this year's budget and because of having to pay gold belt back for the gondola, we essentially have drained our savings or will have at the end of this year.
Speaker 2:Wow. Okay.
Speaker 3:And so our with the exception of we do have an emergency fund, but that's not appropriate to use the emergency fund to to fund regular programs. So, so, yeah. So in my mind, I'm I'm happy that the assemblies of the past were conservative and gave us that room to walk this process carefully. Otherwise, we would have had to make a lot of those cuts this year. Mhmm.
Speaker 3:But it does put us in a precarious place going forward.
Speaker 2:So a year from now, how should the public judge whether this, budget worked or not? And and let me let me give you some parameters maybe to help answer the question. One financial, one service level, and maybe one thing residents should notice about daily life. So imagine us a year from now, this budget has passed. We're looking back at this.
Speaker 2:What's what's the barometer, you think?
Speaker 5:I mean, I'll just I'll chime in. I mean, there will be changes that we notice here in about three days. I mean, when July 1 starts up, that is the new FY '27 budget. There will be two less people working at the museum. There will be less hours there.
Speaker 5:Pardon me. There's a people will notice the trails in a number of cases are gonna be a lot brushier because we cut a $75,000 trail mix contract we do. Again, Travel Juno will have less operations to market to bring people to Juno. JADC, again, maybe some reduced programming. They may have some anyway, I'm I'm not so intimately familiar in their exact day to day operations, but there will be changes there.
Speaker 5:Right. Heat Smart grants, they'll people will get less, support if they call, you know, the city and talk to the clerk or the administration line. There's a position that was halftime that is no longer gonna be there. And and Christine talked about some of the onetime kind of our capital projects, that we that we paused, scaled back, stopped. We did also make reductions to capital improvement projects for, like, pavement resurfacing, and some other you know, and some maintenance things.
Speaker 5:It wasn't tremendous. I wanna say overall, some of those kind of more nuts and bolts infrastructure things were $405,100,000 dollars reduced this year. Yeah. But that will lead to less work being done on some of those, you know, key things going forward just as a fact of less revenue. You know, next year, we can see where we are in the revenue picture.
Speaker 5:Does that need to be a sustained reduction, or can that be brought back up? But those will be those will be some of the changes in those. Eagle Crest is gonna be operating at a less
Speaker 2:Right.
Speaker 5:There's gonna be less people. There's gonna you know? And they're still trying to figure out there was a there was a reduced operating budget support for Eagle Crest. We will see what you know, how that turns out into, ski days and staffing. Is there gonna be concessions there?
Speaker 5:Anyway, those are some of the ones that came up to me. But, again, we we we tried our best to not Sure. You know, not totally nuke an you know, but there there will be impacts. And, it was, just because there weren't, you know, tremendous impacts that people will see from July 1 to June 30, if something doesn't change, I I would say, don't feel like that that is that's all they're gonna see because this was It was a
Speaker 2:brutal process.
Speaker 5:It was brutal, and and still we didn't we didn't make the the reductions and and changes that we will need to make in the future or future assembly we'll need to make unless the revenue picture changes.
Speaker 2:So the the story that I'm getting from you is that, next year is gonna be tough based on on, you know, not achieving what the assembly needed to achieve from a budget cut standpoint this year. It means we've just pushed it further down down the road.
Speaker 5:Right? Yes. You're right. I mean, unless the revenue picture changes. And, again Okay.
Speaker 5:I we did set our goals. I don't feel like I'm like, oh, we failed. I think we went through a very tough process, and we were like, you know what? To get to 2,000,000, we we cut 1.2. We would have had to potentially close the Augustus Brown pool.
Speaker 2:Right.
Speaker 5:That it that would have saved $600,000, but we looked at it. We're like, we need to see we can wait, but this is something that may need to happen. But we didn't wanna take that drastic, you know
Speaker 2:Got it.
Speaker 5:Drastic choice this year.
Speaker 2:Blue sky thinking. Is is there any opportunity to tap in more of what the cruise industry bring brings to town? And I know that's been a discussion, but from a layman's standpoint, you know, we see five, six ships here. I I was just in Ketchikan where they have nine ships a day for Crynova. But is there any opportunity to leverage what's happening there more than we are right now?
Speaker 5:I I mean, we in this last year, we did double dockage fees paid by cruise ships that come to city docks, and that raised another 2 and a half, 2 and a half million. You know? Head tax is what it is, and there are tight, restrictions on where on how that how where how and where that can be spent.
Speaker 2:What happens with the new dock that's gonna be built? What does that do to increase things?
Speaker 5:It would I mean, it'd increase property tax based on the valuation of the of the, you know, of the development. Okay. It would lead to slightly more head tax, I believe, because when a dock is or excuse me. When a ship is lightering in the channel, less people come to shore than if it's tied up to a dock.
Speaker 1:Right.
Speaker 5:Probably not gonna be tremendous. And, again, we yep. Sales tax too. Yeah. Just based on some other things there.
Speaker 5:So
Speaker 2:I know how difficult But I see how difficult yeah. I I can I can see, Christine, you're nodding? The these are questions I'm sure you've been asked asked dozens and dozens of times.
Speaker 3:We hear that one a lot.
Speaker 2:Yeah. I bet. Yeah. Sure.
Speaker 5:And there there, you know, there are some other foregone revenues that we're looking at that that may help, property tax on commercial vessels. You know, currently vessels don't businesses that run commercial vessels, boats, ships don't pay property tax on those assets unlike taxis or, airlines like seaplanes and wings. They pay property tax on the value of those, of those of that property. But anyway, though and these things will they they will add up. Do they get to 8,000,000 recurring.
Speaker 2:So so let me let me ask you this. So you've mentioned some of the pain point. Feels like death by a thousand cuts. Is that the saying? Is there I probably got the saying wrong, but you know what I Yeah.
Speaker 2:The the, is there a place folks can go to say, you know, they're gonna feel we're gonna start feeling some of this as of July 1. Is there a place we can go to to double check they haven't made pay paid attention or haven't checked out the articles or haven't heard us talk about it? Where can folks go to find all the information they need online?
Speaker 4:Greg's just pointing at me. That's good. Yeah. Yes. There's a lot of informational resources available to people.
Speaker 4:If you wanna learn more about the city budget because, as you may have gleaned from this conversation, it's extraordinarily complex, and there's a lot of moving pieces. Juno.org/finance. That's the finance homepage. They have a bunch of informational resources there. If you're interested in learning more about the community engagement piece of all this that happened earlier this year, all of the workshop materials from the community compass process as well as the survey results are all posted online as well.
Speaker 4:Those are at juno.org/community-compass. And this is a little off topic, but I'm gonna plug it anyway. Christine is leaving us this year, leaving the assembly, and we're sad about that. But, that means that, people need to run for city assembly. So if you have thoughts about the budget process and really big ideas about how things should change, I encourage you to think about running.
Speaker 4:We need more people. More election information can be found at juno.org/clerk. The candidate filing deadline, I believe, is gonna be open from July 17 through the twenty seventh. So that's the big first, mark for people to hit if they're interested in getting involved.
Speaker 2:Christine, thank you to thank you thank you for your service to our community. Really fantastic to have you guys here. Finance chair Christine Wall, deputy mayor Greg Smith, CBJ engagement specialist Phil Hipshen. Thank you all for coming in today.
Speaker 3:Thanks for having us. Thanks, Cliff.
Speaker 1:You've been listening to Capital Chat on KINY, your connection to the people and organizations making a difference in Juneau in Southeast Alaska. Subscribe to the Capital Chat podcast everywhere you listen to your favorite podcasts and at kinyradio.com.