Anchorage Assembly: Budget and Finance Committee-of-the-Whole Meeting

Members are able to show up. I know some folks are traveling.

Okay everyone, I'm going to call this committee meeting to order. This is the Assembly Budget and Finance Committee meeting of the whole. We are noticed today. Today is July 16th, Thursday, July 16th, 2026. We're noticed from 10 to 11 a.m. We will do introductions and then we'll move through our agenda.

Starting with Mr. Handlin. Donald Handlin. Jared Gerker. Zach Johnson. Anna Brawley.

And that's the folks in the room. So I'll go through folks on the phone. I see Member Baldwin-Day.

Yes, Jared, I'm here and will be joining you in the room shortly. Okay, thanks. Ms. Silvers?

Yes, here. Mr. Martinez? Yes, present. Thank you. And Ms. Park?

Present, Chair. Thank you. Any members on the phone I missed?

Uh, member Sydney Scout is here. Okay, Scout, thank you. Um, okay, and I know, um, my co-chair Mr. Voland is traveling, um, and so I think that's most of us here. So, uh, also in the room we have, uh, Clerk's Office, Assembly Council, some members of the administration that we'll hear from shortly, and, um, a couple members of the public. So, uh, next let's move on to our standing reports.

Um, and I'll know— I know we'll be joined shortly by our OMB director, uh, who is going to be bringing some additional documents that are in our email. Um, so if you want to come up, Mr. Mills, we'll hear from the Budget Advisory Commission chair for our regular report.

Yeah, thanks. We had a very productive meeting last week. We got what I understand is a preview of the presentation you guys will be getting today, which I promise is very interesting and informative from Ms. Brouse. We took your suggestion— well, I brought your suggestion that we might as a body produce a Budget Advisory Commission budget priorities memo. To the body, and they liked that idea.

So I'm currently drafting that, and we will— we're scheduled to adopt that at our August meeting. At our August meeting, we'll also be getting a presentation from the school district on the foundation formula, which I expect will generate some conversation, potentially resolution. Happy to take any questions. Thank you. Questions from members for Mr. Mills?

And again, if you're on the phone, please feel free to text me.

Okay, I don't see any questions. I will note, so we had— so I believe the presentation you're talking about is about service areas. So that was— we talked about having that this month. We are gonna have that in August at this committee. But of course, big, very important conversation that touches a number of areas, so looking forward to that.

And I guess my only question then would be for the budget priorities, just curious if the BAC members had gotten into kind of what that would be, or if you're still working on that at the next meeting. The structure that we came up with in order to not compress the August agenda too, too much, um, is that our staff support person, Amanda Moser, solicited, uh, input from the members, and then she's going to send me that input, um, to make sure that it's informed with the members priorities, and then I'm going to draft it taking that into account and we'll consider it at the meeting. Yeah, thank you very much. And then I also see a comment from Ms. Baldwin-Day, so go ahead.

Yeah, thank you, Mr. Mills. Just wanted to express my appreciation to you and the Commission for just taking on a more active role in, you know, requesting these kinds of reports and then issuing resolutions back to us. I think that's a really helpful cycle and I wanted to thank you publicly for the work that you're doing.

Thank you. We, we definitely value partnering with the Assembly on this stuff, so I'm happy to be here.

OK, any other questions? OK, not seeing any. Thank you, Mr. Mills. So next we'll move on to our usual updates, and I see we do have our documents and we have someone from Treasury to give a revenue report.

Sorry, if you want to come up, please. Oh, sorry, I was confused about the order.

Yeah, sorry. So first we'll do our MOA Trust update, then we'll go to revenue reports. So apologies for that. Go ahead. Thank you.

I'm Kevin Liu, Investment Director for the MOA Trust. MOA Trust had a volatile month in June. As of June 30th, the return for the month is 0.1% and the year-to-date is 6.9% with total value of $509 million. Despite a small positive return of 0.1% in June, MOA Trust still outperformed some of the major stock markets. S&P 500 was down 1% and NASDAQ was down 2.8% for the same time period of June.

In late June, the market experienced a huge major sell-off that was heavily concentrated in the technology and semiconductor sectors. The market also had a massive quarter-end rebalancing in the global stock markets. N.O.A.H. Trust continues to maintain the asset allocation targets, and given the fiscal year is the same as the calendar year, We still have more than 5 months to go before the end of the fiscal. I personally am optimistic that we will meet the target returns of 4% payout rate and inflation rate.

For your information, the inflation rate at the end of June was 3.5%. And this concludes my remarks. Happy to answer any questions. Thanks very much. Questions for Mr. Yu?

Mr. Kirker.

So June was a pretty volatile month. Do we expect that to continue into, like, what's kind of the contributing factors there? You said a sell-off, but is that something we should expect in the next months? Yes, thank you for your question. So before the meeting, I did look at the market again.

So the technology sector, they continue to have a huge sell-off because I think a lot of investors are worried about the AI bubbles. I mean, the talk has been going on for the last 6 months now. Yeah, I think just— but you always hope for the best, right?

Yeah, thank you. I guess I don't see questions on the phone. I have one additional question. I imagine most of our positions are really long-term because I know we're investing for the long term. So these short-term— I guess I'm curious, kind of, is there Are there any kind of more short-term, intended to be more accessible, like cash investments, or is this portfolio really more like a retirement fund or something where it's really meant to be long-term only?

So the MRA Trust, we consider ourselves as a long-only, long-term investor. We don't typically react to the markets. And not to also mention that we have a 2% cash allocation currently in place, so we can always face the liquidity issues going forward.

Okay, thanks very much. Don't see any other questions at this point, so thank you for your report. Thank you.

Okay, next then, and apologies for the confusion, so moving on to our reports, our revenue report, and I believe we have— print out there, but Then we will go on with that and then we'll move to budget to actual. Oh yeah, we do have that. OK, thank you. So there's a revenue summary highlights in print that we have.

Thank you, Chair Brawley. I'm Glenn Cipriano, Municipal Treasurer. We're going to go over our revenue summary highlights as of 7/14/2026. These are SAP revenues.

On the first page of the revenue summary highlights, I call your attention to room tax about the third column down. We had a very solid first quarter 4th quarter, $8.1 million. Between June and October of this year, to hit our budget forecast, room tax has to bring in about $30 million. So we're going to be watching that very quickly. We've kind of been seeing a more balanced revenue stream.

The 4th quarter has been increasing in volume for the last 2 or 3 years. So we're looking at a more of a 4-season type revenue stream. But that's one area very difficult to forecast that we'll be watching closely. Dropping down a couple columns, you'll see tobacco tax at currently at $7.4 million against the $19 million budget for 2026. It seems that tobacco tax has stabilized.

We've had our largest vendor redo some of their processes and we're kind of seeing a little bit more predictability coming into that market. And we're fairly confident about that $19 million number. Okay, on page 2, I'd call your attention to the rental vehicle tax. We're about $200,000 off from where we usually are at this point of the year. Our budget for 2026 is $10 million, and we're watching that, but it appears to be maybe a manifestation of the increase in cruise traffic versus regular long-term visits using our hotels and all the restaurants and things like that.

We'll be watching that fairly quickly. Dropping down a couple columns, you see building safety, very active area, which is good news. It's a great leading indicator for economic activity in Anchorage, currently at $3.9 million against a $5.9 million budget. And finally, alcohol and marijuana revenues have appeared to stabilize this year. As you know, we saw weakness in the third and fourth quarter last year.

We took our projections for '26 down. You see 5 point excuse me, $14.2 million for alcohol and $5.0 million for marijuana tax. And we look like we're on track. So we see some stabilization, some stabilization in that lower expected revenues. That's all the comments I have.

Happy to answer any questions from the committee members. Okay, questions from members. Mr. Johnson. For tobacco tax, that doesn't tax vape-type products the same as we, we do tobacco, does it? A different— a different rate applies to tobacco-derived products as opposed to cigarette and, and regular cigar tobacco taxes.

Yeah, a different rate, different lower rate, I assume. It's—. I see our Deputy Treasurer there. We had—. I think it's 55 percent of manufactured costs or something like that.

I'd have to research that. I could look too. Thank you. Okay, other questions from members?

Okay, not seeing any, or folks on the phone. So thanks for your report. Okay, thank you.

So next we'll move on to our other standing reports. So we have our budget to actuals, we have our OMB director at the table, and then there's a packet before us, and it's also in email. So I will turn it to Ms. Brouse. Thank you, Chair Brawley. Um, owner Brouse, Director of the Office of Management and Budget.

Uh, you have the, um, budget to actuals report in front of you through June of 2026. So this goes through June 30th, um, and, uh, that is 49.3% through the year, as you see at the top of the first page. Um, the, uh, full percentage, um, spent encumbered through 49% of the year is 46% for the municipality. We still have a handful of departments that are, you know, running around 5% hot. The 5% variance is usually one that we don't necessarily take any strong positions on because they're sort of inflow of whatever time of year it may be.

But some of the others— now is the time of year when we like to start seeing the transition where if somebody was overspent at the beginning of the year, they should start coming in line with that. Spend, um, now and through the next quarter so that by the end of the year it's all leveled out. And so we keep an eye on any of the departments who continue to run hot from here through the rest of the year to determine whether or not there's anything that we need to do to adjust for that. Um, but for the most part, all the departments are in a stable place on full actual spend so far. Any questions on page 1?

Okay, page 2. Labor, 48% spent through the year. Non-labor, 42% spent. The—. I'll draw attention to the maintenance and operations line about halfway through the page.

The assembly took action on some reappropriations at a previous meeting, and this report was pulled before those budget moves made it into SAP. So the maintenance and operations labor spend at 55% and the non-labor accumulation at 25%. Next month, you'll see the report show those labor adjustments, including the overtime adjustment that was part of that document that was approved because of the amount of overtime that they spent during the first snow season of the year. But for the most part, the departments that are running particularly hot on this page are in the non-labor category, where they've spent the majority of their non-labor either through encumbrances or contractual requirements, but we haven't heard anything from the departments so far that lets us know that they are seeing any challenges with the— with their non-labor as of right now. So for the most part, 6 months were pretty good.

Any questions on page 2?

Not seeing any right now. Okay. The overtime page. This I know has been a topic of conversation for the budget season and also just a general Curiosity. That wasn't the whole building, that was just that one person.

That's okay. But I will say that as part of the budget process, we've started meeting with the directors, and we had a whole day of training workshops with directors and for directors on Monday about budget and how do we interact with the budget, what is our budget process, but also how do we work in SAP and what are these 7 numbers mean all in a row, and how are we supposed to remember all 150 of the fund numbers, etc., etc. And part of that conversation was making sure that all of the directors, because we've had a high turnover in the last 5 years, all of the directors understand that the overtime budgets are adjusted when they request the overtime budgets to be requested. And that's the same for the bulk of their budget proposals, is they are in charge of letting us know when there are challenges with their department. If we see them, we you know, talk to them and sort of consult about it.

But if there are issues and they understand those specific issues, then they usually make that part of the proposal change during the budget process. So we wanted to make sure that everybody was aware that the Assembly is paying attention to the overtime, that part of our budget this year is going to be the adjustment of those overtime amounts, either to make sure that the departments that do not have overtime understand that they should not be charging to overtime within their powers, and that the departments who have overtime and operate on overtime time like APD and AFD have the right amount allocated for their overtime because the overtime amounts— we don't have total numbers on it yet, but they haven't been changed in I think at least 4 years, which means that the labor rates that they're calculated on are out of date. So that's part of the overtime adjustment that you'll see as part of the budget process as well. But for the most part, everybody seems to be running this sort of similar patterns that they were at the first half of the year, except for M&O who has tightened up, but their number you see again halfway through the page, they are 100% spent on their overtime. And that is why the overtime budget was adjusted in the last assembly document that was approved to allow for additional overtime for the second half of the year.

Any questions on overtime?

First, I'll note we were joined by Mr. McCormick on the phone at 10:19, and Mr. Handlin questions. Yeah, so finance at 342% over on overtime. Yes. And that is over the last couple of years, the finance overtime has been attributed to the controller's office and the completion of the ACFR. This year, the bulk of the overtime the controller's office has been able to control and sort of reduce their overtime because of how they are now working through the ACFR process.

But the overtime this year is on property appraisal. From the assessment process and the overtime that department has had to spend, which, as you know, is very robust with all of the hearings and such that the department has had to work through. So yeah, it's a number that we also don't like to see and hope will not be there next year.

Other questions?

I do have one, and I think this is just a really basic question. So you described, you know, the overtime budget has not been updated.

And saying that it's really up to the departments to request those changes. So is this really a feature of our continuation budgeting process where we copy-paste the prior year, make some adjustments? So that's kind of why these things get carried forward. To the Chair, yes, that's exactly what the reason or the outcome of a continuation budget is. If, you know, we're working from a base budget of about 2010, and if the 2010 overtime number was never adjusted, then that would be the number we are working with every single year.

If the departments notify us that their overtime needs to be adjusted, we make that part of the budget process. If we recognize it, then we make it part. This is, you know, the first year that we have had the rolling confirmation that the overtime allocations are not right. And so going in there and making them correct based on, one, the actual labor cost that these departments are experiencing, but two, The, um, the, the sort of more, uh, useful is to understand what those hours are that they use on a recurring basis for overtime. Are they cyclical?

Is there sort of a standardized amount that we would expect to see every single year? And then trying to control to a lower level than we would want to see overtime being spent at. Or if there is a department with a very high overtime use the analysis of should there be an additional staff member as opposed to constantly rolling overtime? What is the balance in that? Is there cost savings?

Is there personnel savings in terms of the capacity and stress that we see from running overtime? So that's part of the process that we go through when we change the overtime budget. So there's a justification that comes along with the amount of overtime approved. Thanks. And I'll just make a brief comment.

I think one is this is— that is the intersection of the management function of OMB and the budget function of OMB. And certainly we don't get involved in the management, but really how that budget is actuated through the year is very important. And then I think to your point about kind of 2010 is the baseline that we've been operating on for over 15 years now. And so I think a lot of the work in the budget, and I'm excited that I know members are eager to dig in as well, is going to be really not just the copy-paste exercise and not just the triage of figuring out how to fund certain things, because that's really been the posture I think that we've been in as the Assembly for the last few years working with the administration. So, um, so yeah, I think expecting more of this kind of digging in and really trying to optimize what's there to the extent that we can, um, is going to be the work of this year.

So anyway, so, so we'll look to OMB to, uh, lead that work and work with you on that. So, uh, no further— oh, Miss Baldende, go ahead. Yeah, I think, I think I have a similar question, but asked a different way. So at what point do we, at what point do we sort of look at our last year's actuals and true up what we expect for the coming year? So, I mean, just looking at like 2025 full-year actuals for overtime for fire.

Their overtime spend was almost $7 million. The approved overtime budget for 2026 is like closer to $4.3 million. And then also similarly with police, our full-year actuals with police were over $10 million in overtime spend. The approved overtime budget for this year is $4.9 million. And so at, I mean, at some point, if this is like how we've been operating.

Yeah, at what point do we start to just tell it, tell a different story to ourselves and our budget? There's a, there's, there's a different timeframes and different ways that we do it, but when it comes to how long do we wait to watch the actuals be different, the answer is depending on the category, anywhere between 3 and 5 years. And so, because we roll averages, if there is a 1-year spike in a spend, we're not gonna change the budget. We're going to recognize how and why that spike happens, try to control to it. If we know that it is an ongoing change, then we would have to address that budgetary change.

To the point of, let's take the fire department because you mentioned them, and we've talked about the fire department overtime here regularly. We've done presentations on it. So in the relationship where we are working on a continuation number, and that number is based on a specific wage amount, you know, if we're averaging a firefighter hour, let's say it's $50 an hour fully loaded cost. With benefits, etc., and you multiply that by the required number of hours that AFD works OT, which is 3, 4 hours every single shift because they work 56-hour weeks, and the FLSA rules mean that the last 4 hours are mandatory overtime. We do not have overtime in that time frame between 40 and 53, but the 53 through 56 is mandatory OT.

Which means that the fire department's everyday operations function with a very high number of OT hours. And that number that is currently in the budget, to my understanding and the calculations that I have seen, is the number of OT hours that they work regular shifts plus a little tiny cushion. But because the wages have changed over a number of years and the allocation of those overtime hours, either through secondary callouts where we're assisting the state or the feds for other problems that they may have, and we send firefighters that way and we backfill with OT. One of the arrangements of that agreement with the state is that they also cover the cost of those OT hours. So not only do they cover the cost of borrowing the firefighter, they cover the cost of the OT hour to backfill.

And that transaction isn't necessarily accounted for in our budget. So on an annual basis, if we have a really hot fire year, sorry, then there's more OT callouts coming from collaborative projects, and then our OT budget will be well overspent. Having said that, that's not necessarily entirely the case with the fire department hours, but it is a portion of the case with the fire department hours. The other part of it is that the wages have changed dramatically, and so that that blended average, that $50, we think is now— these are numbers we're working on— we think are now closer to $60 an hour, which means that this OT amount would have to be recalibrated even for their regular accepted approved overtime that's in their operating budget. So those are the kinds of calibrations that we have to make.

The police department is a slightly different situation because the reason their overtime is so hot is because of their vacancies. So the amount of overtime that the, that the police department runs is particularly hot because they are missing 70 police officers. And so they're running shifts and people in voluntary overtime as much as needs to happen. And then that means that the labor amounts that are spent on the natural operating labor side are being spent in the overtime category. So when we were dealing with vacancy factors, We watch the overall labor budget for that department.

It's not, are they blowing their overtime? It's, are they blowing their overtime and are they still under their labor allocation? Because that means they're controlling to the top number and not, you know, only focused on the OT number, but on the operations that they can achieve with that labor allocation. Does that make sense? Mm-hmm.

So the, uh, appropriate timeframe to do it in, I think, is about every 3 years. Make sure that your 3-year roll is not outside of the norm or the average. If it is, you take a look at it to see what the adjustment would need to be, and if you want to adjust it and can adjust it, you do. So where, where are we in that sort of 3 to 5 year window right now with respect to— I mean, I'm looking at fire and police specifically just because those are proportionally the largest over time. Numbers that we've gotten.

Correct. And that, that's what we're doing as part of this budget cycle, partially because the Assembly has requested that analysis, but also because we ourselves, you know, I'm now in the 3-year range where we have stabilized the budget enough to know and compare across pre-pandemic operations and post-pandemic operations what those OT numbers have been and whether or not the, um, the spikes in the OT are attributable to cost increases or they're attributable to operational changes that we have to adjust for. Copy. Okay, thank you. Okay, and I know we were joined in person by Miss Scout just a couple minutes ago, and next I have in the queue Mr. McCormick.

Go ahead. I think, uh, she mostly answered my question. Same concern as Member Baldwin-Day.

Um, next page is the travel budget. The overall year-to-date travel spent is 36%. The overall total for the adjusted travel budget is $585,000, um, under budget by $373,000 right now. Um, you see the budget adjustment about a third of the way down the column for the fire department. We had been talking about that, um, showing up at some point in the next couple of months over the last few Budget and Finance Committee meetings, and that is the The fire department's travel budget transfer, again, attributed to the amount of travel that comes when they do collaborative exercises or callouts, and the fact that that travel is paid for by the people who are using our personnel for public service.

But they—.

The—. We have to book the travel, therefore we have to have a budget to be able to approve it. And so there is this sort of trade-off where We give our baseline approved municipal funding of the travel budget at $50,000 at the beginning of the year, and then the department does the assessment of how much training, how many programs are they going to have that will require travel, where will that funding come from. Either it's provided for by the, the, the people who are requesting the travel, or it is provided for within our budget, but the budget has to exist. So you see both the police department and the fire department make those kinds of adjustments once they have done their operational analysis for the year and know how much space they're going to need.

This does not, um, give them more money. It just moves a non-labor allocation into the travel line so that they can do those operational, um, programs.

Great questions from members.

Okay. I'll just note one interesting tidbit. I was looking at the code and I found, I was trying to find some other information about the budget. And I was reminded that in code, it is required by our code in our budget to itemize travel separately. So that is an interesting, just a side note as a category.

To the chair, both overtime and travel are controlled budget items. So we control to those levels or attempt to control to those levels., but the travel line in particular is required to be reported separately so that it is visible. Thanks. Of course, those are all in the non-labor category. Correct.

Okay, let's move on to the next page. The alcohol tax, the alcohol tax is a slightly different scenario, as we know, than the 46-49% spent through the year. The alcohol tax right now shows 96 or spent, and that is mostly because the nature of the contractual encumbrances and spend within the alcohol tax mean that they're fully encumbered either at the beginning of the year or when the contracts are completed. And then, um, the, uh, reporting and operations performance is measured throughout the year. Um, for the most part, everything looks like it is moving out the door.

We have a couple of, uh, lower amounts that are charged from our program operations, which are personal and staff lines, and those we expect to see sort of true up as we go throughout the year and make sure that the staff time is being charged in the right area.

Any questions on alcohol tax? Not seeing any right now. Okay. And marijuana tax, same story, mostly a program fund, and for the most part everything is out the door, and the tax collection line item you see has a 0%, um, uh, amount next to it. During the workshop at the beginning of this week, we were able to speak with the treasurer and the executive director of the ACE Fund and determine that we can make some changes there and align that so that the collections are being charged appropriately.

And so that should change within the next couple of reports. But for the most part, there's nothing that I am necessarily concerned about on the ACE Fund page. Any questions from you? Any questions from members?

Okay, not seeing any at this time.

Okay, so I believe that's the end of our reports. I will note on our agenda we have our usual standing reports, and there's a change you might have noticed from last month. So before, we had a callout, number 5 was the building safety service area. That was obviously an area of focus. We've updated and expanded that to updates on fund positions.

So that is, again, if we don't have an update, we don't need to talk about it, but it's really highlighting that we know that there's these 5 funds that we've— I think it was June they were presented in detail. So those are ones where, as we have updates on each of those, it sounded like there's different solutions for each them. So we'll come back to that. And then same with FEMA and ARPA funding reports and closeout. I know we're very close to the end of those, so at some point that will roll off, but I'll just see if there's any updates from OMB.

Through the Chair, I think we can do the FEMA and ARPA reports next month, and as we, we roll through quarters on those reports, and so the Controller's Office and Finance will get together and make sure that we have all the numbers right and we can bring that forward so that you have a report on the status of it before we actually get into the budget period. Period. But for the most part, the ARPA spending is done and almost entirely complete, at least the last time we looked at it. And the FEMA recovery is, um, also mostly there. There's still some projects from the earthquake that are outlying that, um, still are in the FEMA process.

But for the most part, it is a, um, relatively, uh, small challenge compared to what it was 5 years ago. Okay, thank you. Yeah, so just to note, those— look for more on that in the future. So then our next and really last substantive item is our— coming back to our draft, very draft FY27 Assembly Budget Priorities Resolution. So the intent for— so I'll set the stage in terms of timing, then we'll get into it.

I know we have at least one amendment and we have a couple versions. So the intent with this is typically every year the Assembly passes a policy priorities resolution at some point in the budget process. We're trying to do it earlier than we did last year, and really, you know, not, not to necessarily to the level of put, you know, $300,000 in this particular line, but really broadly giving direction to the administration as they are actively in the budget process themselves with departments, you know, of what we would like to see, either asking for more information and/or, you know, putting forward some broad priorities or requests. So, so that's the spirit of this resolution. We did talk about it very briefly last month.

I will say the intent of the co-chairs, or the 3 of us working on it, was to get this a little bit earlier, but I'll kind of outline the timing and then we can get into the content. So the intent is to bring this to our July 21st meeting. And of course, what we have before us is still a draft. And so part of the discussion today is to help inform that draft. What we intend to do, knowing that the addendum deadline for that meeting is coming up in a couple hours basically, is to submit a version that we know is not complete.

Is close enough and with the intent of providing an S version. So we have a little bit of opportunity today after discussion to make some changes to it, but I think, I'm hoping we get other substantive input. And so you wouldn't necessarily see that on what publishes tomorrow, but again, the intent is to bring an updated version as well, entertain it and discuss any other floor amendments beyond that. So we know this is, you know, obviously we have to do our work in public. This is a little bit messier version of what that looks like.

But that's where we are. And so I'll note we have two drafts. I guess I'll suggest we look at the draft labeled Baldwin Day because the order of operations was, I believe, Ms. Baldwin Day added to edits that I had made. So we'll start with that as the functional draft. And so maybe I'll turn to Ms. Baldwin Day to kind of briefly walk through it and walk through the logic that is in here..

And I know, I will say a lot of this is kind of the same thing that you saw last month, but we did make some additions, especially to the whereas clauses. And then I know we also have an amendment from Mr. Grecu and Ms. Baldwin-Day. So we'll talk through this resolution, we'll talk through that amendment, and then we'll have some open-ended discussion, and I will be actively taking notes that we will incorporate. So, so go ahead, Ms. Baldwin-Day. Thank you, Chair.

So the, the, the sort of operating principle here is we wanted to set the stage on just things that we, we know are coming or know are in process that are going to impact the fiscal present of the municipality. We wanted to note what we are doing to get our own fiscal house in order. And so that's really the bulk of the whereas clauses on the first page. I'm calling out specifically the recapitalization at Jay Bear and the proposed LNG pipeline, also the natural gas shortage that is going to occur irrespective or is occurring irrespective of pipeline feasibility. And then moving into some structural challenges that the municipality faces.

So this is essentially a recitation of the, the present constraints that we have on our fiscal system. We talked somewhat about the tax cap, the tax cap formula, some of the structural issues related to public education funding, deferred maintenance, and also the, the literal structure of our city, the fact that we are very geographically diffuse, and that, that creates a built environment that requires a considerable amount of investment in order to maintain appropriately. So this is sort of the framework that we are setting out in terms of how we're approaching, or how we propose that we approach, our budget process this year. And then the resolutions are asking for some very specific scenario planning information from the administration. So as far as we understand, this will be the first year where we have a decision before us about whether we will fully fund education or whether we will fully fund municipal services.

There will be a competition happening for the first time that is going to engender a pretty significant public dialogue, I am sure. And so we've asked the, the administration to provide us with a couple of scenarios and then other considerations that we might want to take into account when we're thinking specifically about property taxes allocated to education versus municipal service. We've also asked for a pretty robust review of our position with respect to deferred maintenance. And so we're asking for that in terms of roads, our fleet, stormwater, which we heard an update on at one of the more recent IEUC meetings, which was pretty sobering. Also major maintenance and other needs on our facilities and public buildings.

We hope to get an update from ASD with respect to the state of school facilities and then also our own enterprise and utility assets, which again, although they are self-sustaining and self-supported, are under our purview. And then we would also like to understand what other features or factors we should be taking into account with respect to our population, economic activity, housing demand, and our tax base, and any other information that the municipal— or that the administration is considering with respect to putting this budget together. And then our recommendations are really led by a desire to set very realistic expectations with the community as far as what is possible and not possible as far as service delivery goes in this particular budget environment. And also the, the revenue or the delta that would be required to sort of sustain historical levels of service delivery. What is that?

What is that? What does that gap look like in terms of our current service levels and what we've been able to provide in the past? Is there a number that we can point to and say, you know, to reach an appropriate level of police service, this is the delta, to reach an appropriate level of fire service for a city of our size and geographic footprint, here is the delta. It's to start to put a finer point on where we have these gaps existing. Identifying places where we can make some changes sort of internally in the mechanics of our budget within the existing tax base.

Tax cap, and then thinking differently, perhaps, or not differently, but more intently at the way that we're prioritizing CIP and CIB items, and thinking about where we can be really intentionally avoiding future catastrophic failure in our infrastructure, where we could be investing to benefit density, and how we can actually think through investing now to prevent additional maintenance costs in the future. And then putting a very specific target on housing development, and especially housing development that the market is not expected to create. And then the fifth item on page 4 is one that, that I added. This is a difference in the draft. Most of the, the EBD draft is a cleanup of the original draft with very few exceptions.

The major difference is this fifth point, which encourages the use of technology to think about how we're maybe finding efficiencies in our municipal systems, how we can minimize some administrative burden and also maybe deliver, deliver municipal services in an effective and efficient manner when we do have sort of a staff constraint that we are working with. So, and then the last is just an affirmation that our current fiscal circumstances unsustainable and that we're going to put time and efforts toward as a body toward resolving some of those questions and thinking about the structural changes that might be needed in order to set the municipality on firm financial footing for the future. So that is the substance, and happy to take questions. Full credit to Chair Brawley for putting together an extremely robust first draft. I did the polish work, and that's about it.

So, uh, yeah, questions or comments? Yeah, thank you. And before we turn to that, I'll just briefly add, um, I think this is In the past, our resolutions have really focused on what we would like to see happen. This one does take a little bit different tactic. It does certainly have some of that, and we would welcome other comments on that, but really asking for information, and this is not simply chasing or trying to make the administration do a bunch of extra work, right, but these are really trying to outline and characterize what we all need to have before us to make some of these big decisions, or at least understand kind of what is coming.

And then I'll also just note very briefly, as I'm looking at OMB, knowing that you all would be writing most of this or collecting it, it. The idea, just to be clear on the record, the idea is not that this is a comprehensive 500-page report of all of these things. It's really collecting what we know and being honest about what we don't know. And so maybe it's speculation, maybe it's saying we just, we, I mean, literally this morning the legislature is talking about the gas line, so we don't know what that looks like, right? So it is, so we may or may not know a lot more by then on that particular topic, as one example.

So, so with that, I'll turn to other members. Questions, comments? We can also just dive into the amendment as well. Maybe we'll do that and then we'll have folks kind of chime in with other thoughts as you're digesting this. So I'll turn to Mr. Gerker.

Cool, thank you, everybody. Yes, so this is something we wanted to include in the priorities memo to the administration in the spirit of trying to gather and collect information so we can make the best budget decisions possible with as much information as possible. Table, we are asking for a couple things from the administration, uh, changes in FTEs for, uh, this fiscal year allocated to each designated in their departments. And then also how many, how many vacant non-recruited 4 positions have we had in the last 12 months, and a rationale for why we should continue them in the next year's budget. Um, I know it's a conversation we've had, you know, a few months ago, and you spoiler alert, you should expect to have that again here in a little bit.

But labor is the largest cost driver in our budget, and it's also the area that we exercise, I think, the least amount of oversight and visibility into. And this helps give us a little bit more information so that we can make the absolute best decisions possible as we're balancing these priorities that Ms. Baldwin-Day actually just outlined as well. Because it's going to be a really complicated budget cycle this year. Not that they're not all complicated, but this one's going to be especially complicated, and there's going to be a lot of trade-offs we have to figure out, and this helps us— give us the best information possible. Thanks.

I don't know if my co-sponsor would like to say anything to it. I think you've captured it really well, and I think this is also an attempt to understand perhaps with a bit more granularity, you know, how our labor and non-labor budgets relate to each other.

That's sort of an ancillary piece of this is to get a beat on, you know, are we— do we need to think differently about our labor versus non-labor budget? And, you know, if in fact we have some unused FTEs that are being used to fund non-labor items, then let's understand what that's actually looking like and what the departmental needs are, what the true departmental needs are, so that we can respond to those appropriately. And that's, that's sort of the next step. I think that feels like an important step for us to understand is, you know, what is that balance in this moment? Thanks.

Thank you. Questions or comments from other members? And I'll also say too, so we are not expecting— we welcome certainly a fully formed paragraph, but if you just have thoughts about kind of things that you would like to see in here that aren't here, that are missing, things you fundamentally disagree with that you would, you know, say that we— that this isn't true or we shouldn't do this. I think that's kind of what we're looking for. Or just even if you have questions, you know, things that you would like us to be asking for in this budget cycle, those are all kind of on the table.

So don't feel like you have to come up with, you know, the set of policy priorities that you would, that you would live or die for. So questions, comments, and I'm keeping an eye on the phone text as well. Miss Scott. Yeah, this is This is relating to the— not to the amendment, to the draft from— yeah, the big draft. Sorry, my brain's still waking up.

One question I have about the scenarios.

I'm curious, just for comparison's sake, as we think about— we have two scenarios presented that are within the text. Tax cap, and I don't mean to propose that we would take any major action on the tax cap this budget cycle, but I wonder if we could also take a look at what our budget would look like without that in place.

Yeah, Nancy, I mean, certainly we can look at that. I think just to note, you know, any changes to the tax cap are controlled by the charter, and so the voters would be the ones to decide. But I think there's been a bubbling up of discussion about what that could look like or what it should look like. I guess I don't— Miss Brouse, I don't know if you have commentary on, or like, what would be realistic, I guess, is the question. Through the chair, that's a very good question.

I would need to have conversations with Member Scout to understand what the parameters of if we didn't have a tax cap meant, because I— there are lots of different ways that that could be interpreted, and I'm not quite sure how how you want information returned to that question. Because the plain answer is if we didn't have a tax cap, there would be no control over what we could or couldn't tax for, right, within those major categories. That's, that's the ultimate outcome of not having a tax cap. And so the, the budget constraints would be all within the controls of the administration and the assembly. And, you know, whatever the response from the community is, but mostly within those powers.

Okay, great. Yeah, I'd love to have some follow-up discussion. I think where I'm looking at this, just big picture, is thinking we have two scenarios presented with— within our current landscape. And so I'm, I'm always curious to learn, okay, what is the scenario if our landscape changes? And maybe it's just too big of a Pandora's box.

Blocks for this cycle, but I would love to learn about scenarios that change more of the inputs rather than outputs.

Yeah, Mr. Gruker— or no, Mr. Hanel, sorry. Please keep on mixing us up over here. Yeah, I spoke before.

I was wondering if there was anything in state law that would, I guess, be a prevention on that, if there's any kind of cap or, uh, in state law, uh, through the charitable member handling. I don't believe so, but we can find out. Um, and in terms of whether or not we have our own tax cap, uh, as far as I know, the state does not have any restriction on that specifically. Um, that's all us. Yeah, and I think Mr.

Gates would like to respond as well. Yes, thank you. We do have the tax cap and charter. I think this is Scout's question is, if we don't have the charter tax cap, what would it look like? And Mr. Handyman's on point.

We do have a state statute that establishes a cap and how much taxing can increase year to year. It's calculated differently, but we always fall under it because of our charter tax cap. And it seems to me that Scout's question is sort of like, if we don't have that, how much can we budget for under under the state statutes cap. I think it's AS2945 when— I mean, I don't know exactly. It's in the 45, 50, 70, and we should take a look at that.

But that might leave us, I guess, a little more budget room than our charter imposed tax cap. That may be an interesting question to see what it would look like. I think that's relevant. And I believe it might be—. Sorry, we can't get rid of the state statute.

Oh, you can. You just have to work for it. I will note the rules can be changed. It's a matter of who changes them and by what process. So yeah, certainly that, and that could be— there's been a very large conversation about property taxes.

Obviously a lot of it is tied to the pipeline, which is not directly planned for our boundaries. But I think there's a number of conversations swirling. And in fact, Alaska Municipal League, at their summer conference, I'm going to be doing a panel. Panel on property tax to not to say here's what we should do, but just kind of understanding. And so I think that is something just to flag for later in our legislative program, whether we have a specific ask or whether it's simply something needs to change.

I think that is, that is within our purview to advocate at the state level. And of course the challenge is figuring out what works for Anchorage, you know, and how all these other places, some of which don't even have property tax, you know how that might affect them or not. So I guess the crux of what I'm hearing in your question, Miss Scout, is really can I have a third option? And I think that's really what I think that that's a valid question, and I think that's the— at least for my intent, it is to start with saying, okay, if these are the two finite choices we have in the construction of the structures we have, what does another option look like? And I think, um, that's certainly where we want to go.

And, and of course, I don't know what the answer is, um, but the thought being step one is to ask and to really lay it out clearly for the public, like, this is the constraints that we have and this is the choices we will be forced into. And so, yeah, I think we can think about kind of what that request looks like and whether or not it's in this 120-day memo. I think that is certainly the conversation that we want to build to, and it is difficult to conceptualize when you start taking things away to figure out what that can look like, but it does create more possibility. So other questions, comments on this? Ms. Baldwin-Day?

Yeah, I think these are, um, you know, when, when we talk in the— this AR about, you know, resolving that this the fiscal future of the municipality will remain a priority of the assembly. I think what that signals is that these are exactly the kinds of conversations we need to be having because, I mean, the tax cap is not the only structural limitation or constraint that we have or the only place where we can consider how to better fund services and infrastructure in Anchorage. And I mean, I think there are other things that are in motion that do provide different structural options in terms of how we pay for things. And I think we need to have a— we as a body need to have more conversations about what those tradeoffs look like. For example, are we willing to continue funding drainage projects basically exclusively using bond funding and just chase deferred maintenance to the tune of $1 billion in perpetuity?

Or would we consider standing up a stormwater utility that creates more sustainable and predictable revenue for those kinds of projects? These are two options before us. How do we want to proceed? And that's a structural question. And so, and I think that there are many more of those that we just haven't— perhaps we haven't been desperate enough to surface yet as a body, but we are getting to that place where we need to have the bigger structural conversations around how this municipality has been built.

And does its construction 50 years ago still serve us in this moment? Settlement. So that's really what this AR points to, is that we are committing to have some of those more in-depth conversations together. Thanks.

Miss Brows, through the chair, I have a couple of clarifying questions and comments on some of the— what's been said so far. The first is the, the, the, the question about the tax cap. Is that about what would happen if we don't have a tax cap across the whole municipality, or related to the school district, particularly in this first scenario planning, both?

Yeah, um, yeah, I think, I, yeah, I mean, I think this is something I, I want and need to learn a lot more about in granularity, so I'd love to have a follow-up conversation. Um, it was more of a big picture. We're having, we're asking for these two scenarios within constraints, what would happen if the constraints were changed Yeah, yeah, through the chair to Member Scout, I think one of the, one of the considerations within this document is that right now it's specified that this information is included in the 120-day memo. I will say that it will not be included in the 120-day memo, but there, there can be some, some address of some of these issues within the 120-day memo. I will say that now that I am realizing that this request is for the 120-day memo, the first half of the, of the AR anyway, number 2 is going to be next to impossible in terms of having robust detail within the 120-day memo.

I think that having it as part of the budget conversation, as part of the budget process, will be potentially more accessible. But I would like to understand from the sponsors— not necessarily right now— what kinds of information you want included. And I say this because because one of the constraints that we have within the municipality is that we don't have a whole lot of staff and so everybody is doing the work that we need to do in order to keep everything moving on a day-to-day basis. And when it comes to in-depth research and analysis projects, we don't have them because we don't have staff to do them. And when we want to do them, we usually have to add to the budget in order to accommodate either OT, or a contractual relationship for people to be able to do that work.

And that is, in fact, one of the reasons that we don't have as much information as we would like on deferred maintenance generally, is that we don't fund for that information to be gathered. So, and I'm saying that all to say that the detail within each of these categories of requests will vary depending on what we have available. And, and, but I know that there is work being done on all of these sort of pieces of data. So I'm just saying that so that there is clarification that we'll have to figure out what the nuance on number 2 is. And the other part is the, the relationship to the state and the tax cap and the school district is different to the municipality because the, the control, the tax cap control on the school district funding is interacted with by the state funding and the municipality at this part, at this point, is largely isolated from state funding fluctuations on the operating side.

We have grants through the Health Department and a handful of other departments, but for the most part, the only money we really get from the state on a rollover basis is the Community Assistance Program, and that's a million or $2 depending on the year, and so our budget the state budget doesn't swing as heavily, but the school districts does. And one of the things that happened this last legislative cycle was, I think it's HB 28, that controls the amount of room that is allowed to accrue year over year between how much state funding we get and how much city funding is required. And that number has never been constrained. It's never been an issue before. But because we're seeing these wild swings in assessments, which changes the BSA— or not the BSA formula, it changes the contribution formula for the municipality.

We saw this very large gap this year. The bill changed it so that there is a 4% controlled— this is all my understanding— for a controlled 4% sliver. So I believe what our projected deficit of $12 million— the new paradigm is $6 million as opposed to $12 million. And now we know that there is a control allocation to budget to or to look at to know that's the amount that they could offload to the municipality to a year-over-year basis, so we can plan for it. Previously, there was not necessarily the option to plan for it.

So I'll just note, um, it is 11:01. I'll ask the committee's indulgence if we can go for another 5 minutes to 11:05. Um, we know we have another committee coming up. I'll also ask if there's anyone in the audience who would like to provide Audience participation.

And not surprising as it's mostly folks for our next committee. So, yeah, so I'll just note, I think in terms of intent, I can say understanding that this is a big ask. I think the ask is really to do a summary compilation, you know, in the form of a paragraph. And it really can be— we don't know these numbers yet. But I think we've— as I and others have talked with folks about our muni budget issues, I think one of the questions that's come up that I think we're trying to get a handle on is what is the— and I'm quoting someone else— what is the scope and scale of the problem?

And I think because we keep uncovering billion-dollar deferred maintenance liabilities, so I think at some point we are attempting to put a number, even if that number is rough, on what our problems are and trying to characterize those. So I think that, that's really the intent. And so I think we can certainly look at what's realistic, but that's the goal. So other questions, comments from members on on this.

Okay. Well, I'll say in terms of process, again, you'll see something that looks mostly like this coming out on the addendum soon with the intent of, one, producing an S version, and two, again, making space for member amendments and additions, changes, things like that. If you have additional thoughts or, you know, things that are not maybe fully formed amendments but you want to provide, please provide them directly to Jamie Hines, who is our acting budget analyst and our clerk.

And just to give another opportunity, if there's things that you would like to be put in, we do anticipate this would be a late on the table item as a substitute version. So I wanted to give opportunity for that and managing the logistics of doing a bunch of amendments on the floor. And then we'll work with Ms. Braus to tailor it down to what's realistic.

I think the last thing I'll say, again, just a process issue, in terms of our budget process, so members got, and it's on the calendar now, multiple work sessions on our budget. Those are our typical work sessions that happen in starting in October, moving into November. And so we are really early in our part of the budget cycle. But the intent of this committee is to make sure folks understand that process before we are actually in it. And so I think at the September meeting, we've done this in the past to just do a brief walkthrough of what the actual process is, what the calendar looks like before we have the actual content of the budget.

Budget. So look for that soon, especially because we know this will be the first cycle for 3 folks. Even if you watched the 1Q revisions, it's different to be on this side. So, and as always, if you have thoughts, ideas, possible amendments, questions, any of those things, please do talk with departments directly if you know it affects a department and/or talk to OMB, because I think the more— there's a lot of ways to achieve your goals, and some of those can be putting them in the budget before you even write an amendment. And so there's opportunity there.

So with that, I think we don't have any other business before us. I didn't hear anybody for audience participation, so we will adjourn this meeting. Our next meeting will be in August, and we'll pick up with our next committee in about 10 minutes. Thanks everyone, we're adjourned.