Borough likely to suffer wrath of governor's pen

MAT-SU -- The 23rd session of the Alaska State Legislature may be over, but cuts in several areas still loom.

Gov. Frank Murkowski's chief of staff, after a sales tax bill that would reportedly have generated $240 million in revenue stalled in the House, told legislators the governor would be balancing the budget with his red pen, via about $160 million in cuts. On Murkowski's working list of cuts lie things like the longevity bonus, at $44.8 million, $32.1 in school district grants and, what has local municipalities worried, $22.2 million in municipal revenue sharing and safe communities funding.

That cut, if it takes place, would encompass all of the funds that currently go toward statewide revenue sharing. The funding goes to pay cities back for services used by all who travel through their areas. It credits communities for providing hospital service, keeping their roads maintained, having fire service areas and providing other services. The extent of service provided -- how many miles of roads a community has, for example -- determines to an extent how much funding each community receives.

The Mat-Su Borough stands to lose about $1.2 million in areawide, non-areawide and road or fire service area-specific funds. That's in addition to about $690,000 that may be cut in school bond debt reimbursement, if the governor follows through with earlier statements that he'd like to cut the state portion of the debt by 10 percent.

Mat-Su Borough controller Kelli Veech said last week that revenue sharing had already been cut by about 27 percent. That cut, she said, was incorporated into the recently passed borough budget. But the $1.2 million was not added in, so that amount of cuts will have to be made in order for the borough to balance its budget. Prior to the adoption of the budget, Veech sent out an e-mail to assembly members that informed them of the potential budgetary shortfall and suggested a few ways of dealing with it.

Much of the money from revenue sharing, at the borough level, goes to road and fire service areas. The share for roads is parceled out according to mileage in a particular road service area, so the amount each road service area receives differs considerably. Veech said she and public works director Jim Swing poured over the recent budget, looking for ways to respond to the cuts. Several road service areas, she said, had money in their capital accounts -- set aside for larger projects -- and some funding can be used from those accounts to offset the shortage. Other reductions, she said, may be able to be taken from other areas, such as contractual funding.

Borough Manager John Duffy, last week, said although the assembly will not be able to change the mill levy, it's likely they will have to address the borough budget again after the state budget is finalized.

Tom Healy, Palmer's city manager, said although Palmer adopted their budget in Palmer, they, too, may have to take another look and make cuts if necessary. This year, Palmer was slated to receive about $178,000 from the state through revenue sharing and safe communities grants. Of that funding, Healy said, the city planned to keep $68,000 and pass the rest through in grants. The city has been giving out grants to groups who are linked with the terms of the revenue sharing dollars. For example, Palmer receives credit from the state for the number of hospital beds within the city, so Valley Hospital is one of the groups that receives funding from the city. In Palmer's budget, about $38,000 was earmarked to go to Valley Hospital, with another $9,600 set to go to Alaska Family Resource Center and $1,200 to go to Lifequest.

Will the organizations receive those funds? Maybe, Healy said. It's up to the city council. Although the council agreed to dedicate the funding, it has not yet been handed out. Generally, he said, the checks are sent out after the city receives the funding from the state. Like the borough assembly, Healy said the city's passed budget will likely have to be addressed again after the governor's cuts have been made.

It appears Wasilla's city council, which has not yet adopted its budget, may have to do the same. Wasilla Finance Director Ted Leonard said at this point, it's the intent of city administration to absorb the $145,000 difference in funding they're expecting to receive by making cuts in their own budget.

"The mayor's intent is not to raise the mill rate to absorb it," Leonard said.

Leonard said the city currently has $100,000 in a contingency fund that may help absorb some of the income disparity, but it be needed elsewhere. While absorbing state cuts, Leonard said, the city is trying to come up with ways to pay for new costs related to the multi-use sports complex they're hoping to have on line by next spring. In short, Leonard said, less revenue may make passing the budget a more difficult process.

"It's going to hit hard," Leonard said, "but it's administration's intent to absorb it through the budget process."

Wasilla's city council plans to address their budget at its June 2 meeting.

John Manly, spokesman for the governor, said Murkowski's working list of cuts is just that.

"It's just a tentative list, very fluid, very flexible at this point," Manly said.