Anchorage mayor proposes 2027 budget that relies on one-time money, warns of 2028 fiscal cliff

Anchorage Mayor Suzanne LaFrance submitted her proposed 2027 budget to the Anchorage Assembly on Friday, saying in an announcement that it closes a roughly $15 million gap mostly with one-time money.

"We've used one-time funds to buy our community one more year and protect essential services, but that money will not be available next year," LaFrance said. "Without new revenue or increased outside support, we will hit a fiscal cliff in 2028."

The proposed general government operating budget, for day-to-day city services, totals $692.5 million. The administration calls it a continuation of 2026 operations, with increases mostly for contractual labor costs and inflation. The budget would collect $383.1 million in property taxes counted under the municipal tax cap, which limits how much the city can collect in taxes each year, according to the budget's tax limit calculation. That is up about $19.9 million from the 2026 revised budget and leaves the budget about $34,000 under the cap. Another $30.2 million in property taxes, from service areas whose boards set their own maximum tax rates, falls outside the cap.

Under a 2011 change to city code, each year's cap is built on the taxes the city set to collect the year before, mostly property taxes, so money left under the cap lowers the base for later years.

To close the gap, the administration said it cut nearly $1 million in vacant positions, reduced its reliance on contractual services and used $12.1 million in one-time funds, including $8.4 million from a remaining ML&P account. ML&P was Municipal Light & Power, the city electric utility sold to Chugach Electric.

The mayor's office said costs for fuel, heating, building materials, labor and health care are rising, alcohol and marijuana tax revenues have declined, and years of reduced state support have increased the city's reliance on property taxes. "The math simply does not balance," LaFrance said.

Neither tax is counted in the tax cap calculation, and both pay for specific programs. According to the city's preliminary revenue estimates in September, the alcohol tax supports first responders, efforts to combat sexual assault and domestic violence, substance misuse treatment, and preventing and addressing homelessness, and the marijuana tax supports child care and early education. Those estimates put 2027 alcohol tax revenue at $14.7 million, $0.6 million more than budgeted for 2026, and marijuana tax revenue at $4.7 million, $0.3 million less.

A separate $87.9 million capital budget includes fire apparatus and ambulances, road and drainage work, pedestrian safety improvements, a new Loussac Library HVAC system, Performing Arts Center energy upgrades and Goose Lake Park improvements. Capital projects the Assembly approves would form a bond package for Anchorage voters in the April 2027 election.

The Assembly approved $656.8 million for the 2026 general government operating budget.

The Assembly is scheduled to hold a budget worksession Oct. 16 and public hearings at its regular meetings Oct. 20 and Nov. 4. Members are set to work through amendments Nov. 6 and vote on a final budget Nov. 17. Residents can testify in person, or by phone after registering on the Assembly's testimony page.

Separately, Assembly Chair Anna Brawley, who represents West Anchorage, and Midtown Assembly member Erin Baldwin Day are hosting a free, all-day Fiscal Future Summit on Oct. 30 at the UAA Student Union, on the city's long-term finances.