City leaders outlined a proposed budget to the Juneau Assembly’s finance committee Wednesday night that balances increased costs with higher tax revenue. Now, Assembly members will spend the next several weeks deciding how much property tax to collect through the mill rate.
City manager Rorie Watt said his proposed budget reflects increases in both revenue and expenses.
“Almost everything is up,” he said at the start of Wednesday’s meeting. “Costs are certainly up, inflation has driven up the price of everything – commodities, capital projects, labor. All revenues are up. We’re projecting a record number of tourists this summer.”
Property values are also up. Watt’s proposed total mill rate of 10.28 is slightly lower than last year’s, but because of higher property values, the city would still get nearly $6 million more in property tax revenue.
“The property tax burden is the mill rate times the value, so how you set the value will ultimately determine how much more people pay for municipal services,” Watt said. “They’re certainly not going to pay less for municipal services. That’s just not possible.”
Watt said demand for those services has increased, which is why he’s proposed adding some new positions, including a swim instructor, a recreation coordinator for the Treadwell Arena and HR staff.
Though the mill rate applies to all homeowners equally, the increases to property values varied depending on the neighborhood. Single-family home values in the Flats went up by 10%, while values downtown went up 21%. Some residents reported increases as high as 40%.
“Sure, we’re dropping the mill rate to the lowest level it’s been in decades,” Assembly member Greg Smith said. “Some people will still see very significant increases on their tax.”
City finance director Jeff Rogers said the Assembly may want to increase the mill rate further if it decides to add new recurring expenses.
“If you’re taking on a recurring cost that we should expect indefinitely, we would encourage you to set a mill rate that pays for that cost but doesn’t take in any unnecessary revenue either,” he told the Assembly.
He noted that most property tax goes to schools. The proposed budget includes $9.7 million more for the school district than last year’s.
“We are spending more property tax on the Juneau School District than we are spending on everything else that CBJ does in its general government,” he said. “More than half of the non-debt property tax is paying for schools.”
The proposed budget also increases general government spending by $6 million and capital improvement project spending by $7.7 million. The city would spend $6 million less on the hospital, airport, water utilities, docks and harbors, mostly because of cost reductions at the hospital.
Watt is also proposing a few one-time expenditures. They include $10 million toward building a new City Hall and $2 million toward upgrading the police department’s radio system.
“I do not propose these investments lightly, and I suspect that these one-time investments will garner significant public and committee attention during the budget process,” Watt wrote in a message to the Assembly.
The proposed budget also pays off $3.2 million of a $6.6 million park bond approved last year. Assembly member Wade Bryson said they should consider paying it off more slowly in order to keep the mill rate as low as possible.
“That message going to the public would be huge,” Bryson said.
The proposed budget leaves the city with an unrestricted fund balance of $12 million, $20 million in restricted general fund reserves and a $15 million deficit. It uses savings to fill that budget gap.
Juneau residents will have the opportunity to comment on the proposed city and school district budgets, capital improvement plan and mill rate during the April 26 Assembly meeting. The Assembly plans to adopt the final budget on June 12.