The Cordova City Council unanimously approved the $14,415,542 Cordova FY2017 operating budget Dec. 21.
The new budget goes into effect Jan. 1.
The city still faces a shortfall of approximately $860,000 in operating expenses for the new budget cycle, primarily due to the reduction in federal timber receipts and less revenue from raw fish taxes, because of the poor commercial fishing season.
The city will withdraw $860,000 from the city’s permanent fund reserves to balance the budget.
In this new budget, the city appropriated a $1,517,000 contribution to the Cordova School District (CSD), and another $566,000 was designated as a contribution to the Cordova Community Medical Center for the next fiscal year.
Mayor Clay Koplin said the current budget cycle hasn’t left residents feeling all that great.
“The gap is still an issue, and in addition to the cost reductions, $860,000 is drawn down from reserves to help cover the gap this year. With raw fish taxes down sharply, a $251,000 withdrawal of state bond match for school upgrades, and timber receipts very likely to be unfunded this year and into the future, as well as the state of Alaska making many cuts, the City of Cordova budget took a lot of hits on the revenue side all at once,” Koplin said. “Cutting operating and capital budgets at the Cordova School District, the Cordova Community Medical Center, and the city, is not warmly greeted by those organizations or those they provide services to.”
But, the money must come from somewhere, and raising taxes is one way the city is considering generating additional revenue.
Koplin said he isn’t sure raising city taxes is the best idea, yet he feels city government is doing the best they can under the circumstances.
“Increasing property taxes places additional burdens on those who live, work and invest in Cordova. The city council and city manager had difficult decisions, and I think they arrived at a good balance between reducing budgets and raising revenues from the tax base,” Koplin said.
Jon Stavig, the city’s finance director, said residents would see a 1 mil increase in their property tax bills for 2017.
“We estimate the 1 mil increase in property taxes will bring in $240,000 in revenue to the city,” Stavig said.
Council also considered a luxury tax on alcohol and tobacco products sold here, and an increase in sales taxes as new revenue sources for the city, but no action has been taken on these items to date.
“Council may look at the luxury tax or seasonal sales tax increase later. For now, council will look at current sales tax exemptions, to see if there may be a way to adjust the exemptions which would provide additional revenue,” Stavig said.
Tightening the collective belt of city operations is also underway.
While no city jobs have been cut to date, Koplin said staff reductions may happen in the coming year, but any elimination of positions will most likely be the result of attrition and aren’t listed in the FY17 operating budget.
“Cutting personnel is the job of the City Manager Alan Lanning, and the city manager has had strong support from staff to manage personnel expenses, which included some voluntary actions on the part of the employees, and may have involved some minor staff reductions in part time or supporting roles,” Koplin said.
How the city’s budget cuts affect residents’ present way of life depends partly on the residents, themselves, Koplin said.
“How Cordova is impacted by the budget will depend partly on Cordova. If we work hard to keep our dollars at home, I believe we can make up most of the gap. We also need to expand our fishing industry and tourism industry into shoulder and off-peak seasons to better utilize our community resources and create business opportunities – and we need citizens willing and able to take advantage of those opportunities,” Koplin said.
The $300,000 reduction in allocation to Cordova’s public schools was one cut councilmembers and the mayor were loath to make, Koplin stated.
“The school was not funded to the level that either the Cordova School District, or city manager and council would have liked, with a roughly 20-percent reduction of the city’s contribution from the fully funded level,” Koplin said.
The city also provides in-kind services to CSD, such as snow plowing and maintenance, that were not cut.
Cordova School District Superintendent Alex Russin said he understands that revenues presently are not what they’ve been in the past, revenues which allowed the city to fund CSD at the maximum allowed levels.
“I understand, like everyone else does, that economics hasn’t been what they were for a few years. Resources are reduced to the district and will have an impact on us. It’s my job to figure out how to reduce the impacts to our schools. We will continue to provide the best quality education to our kids,” Russin said.
Russin said that historically, the city has funded the maximum allowed by the Legislature each year.
In FY2013, the city contribution to CSD was $1.74 million; in FY2014 the city contributed $1.65 million; in FY2015 they contributed $1.75 million; in FY2016 and FY2017 the contribution was $1.8 million dollars.
CSD’s fiscal year operates July 1 – June 30, while the city’s fiscal year begins Jan. 1 and ends Dec. 31.
“There are minimum and maximum contribution levels that can be allocated based on our student numbers,” Russin said. “While we ask for the maximum and hope for it, the city decides what they can contribute based somewhere within that range. We receive 80 percent of our funding from state and federal sources, and 20 percent from the city. We have no ability to generate any sort of revenue stream. The decisions of others determine what our revenue will be. From there we have control over our expenditures in the school district, and we must make sure that our expenditures will match what we receive.
“The support from the city and the community is amazing. This is a tremendous community who supports their schools, and we have an incredible staff as well who invests much of their own time and resources to give our students the best that they can,” Russin said. “We’re going to do our very best with what we’ve been given, with the least impact on our students.”
Included in the FY17 city budget are transfers to other entities operating within Cordova include $20,000 to the Cordova Family Resource Center; $10,000 to the Prince William Sound Cordova Community College; $70,000 to the Cordova Chamber of Commerce, with an in-kind lease of $23,470 granted for the use of the building, and $4,547 for in-kind services; $104,136 in in-kind services to the Cordova School District; $28,134.48 in in-kind services to the Cordova Community Medical Center; and $66,664 to Quorum Contract.
Koplin said it’s time to perhaps working a little harder, live a little leaner, and give community needs a little more emphasis and personal needs a little less importance.
“To paraphrase John F. Kennedy’s famous quote, ‘Now is a time for us to be considering what we can do to help grow the health of our communities and state, and focus a little less on what they are doing for us,’” Koplin said.
“My suggestions are simple and consistent: Shop in Cordova and use local services if you are a resident. Provide high quality services at the best possible prices for businesses and service providers. Find ways to meet the needs of customers and citizens that offer value above and beyond the pricing/cost, to encourage local shopping and use of those services,” Koplin said.
“We need to revise the habits that we developed when we had excellent fishing seasons and a lot of state and federal money pouring into the economy. Cordova is a great community blessed with resources, an economic base, and a lot of talented and loyal citizens. Communities all over Alaska are facing similar challenges, and we can feel fortunate that we have a city manager and council who’re willing to make some hard decisions to balance the present needs and operation of our city and services with the need to structure a sustainable future.”
Even under the strain of the recent budget cycle faced by city officials, Koplin said he remains highly optimistic regarding Cordova’s financial future.
“Now is the time for strategic planning for the development of a sustainable future which will likely include some choices about right-sizing our community services to live within the leaner revenue picture that confronts us. Talented and experienced leadership at our schools, health services, cooperatives, science center, aquaculture, non-profits, and businesses, is the other X-factor that bodes well for us – if we can work together to execute a winning strategy for the future,” he said.
The City of Cordova FY17 Operating Budget can be found here
http://cityofcordova.net/government/mayor-council/resolutions, under City of Cordova Resolution 12-16-3
