Conservative approach keeps Wasilla in the black

WASILLA — Although Wasilla has been insulated from many of the economic trends that are troubling residents in the Lower 48, the city’s not immune. That’s part of the message gleaned from a 137-page independent financial audit of Wasilla’s books for fiscal year 2011.

Although the city is on solid fiscal ground, sales tax revenues aren’t growing as fast as in the past, said Troy Tankersly, the city’s finance director. The audit prepared by Anchorage firm KPMG shows the city has a healthy end-of-year fund balance, as required by state law, and that Wasilla retired about $2.6 million of its outstanding long-term debt over the course of the year.

Ending fund balances of a little more than $11.2 million includes about $7.2 million in unassigned monies “available for spending at the government’s discretion,” the audit says.

While that seems to show a healthy bottom line, it’s also deceiving, Tankersly said. By law, the city has to maintain a reserve equal to six months of operating expenses, so even if the city decided to spend that $7 million somewhere, it would need to have a plan to replace it within the fiscal year.

“That’s really from the code that says we have to maintain a 50 percent to 60 percent fund balance,” Tankersly said. “It’s a way for the city to not spend down its fund balance frivolously. If an emergency were to occur, the city could operate … for six months before we’d have to close the doors.”

While sales tax revenues swelled by $495,804, they aren’t growing as fast as before, he said, adding that revenues are growing at all is a good sign.

“The trick is to not get overzealous with this economy we’re in,” he said. “Don’t think that Alaska’s immune form it, because we’re not.”

That said, as a city, Wasilla’s finances are healthy, he said.

“The financial state of the city is good. We are doing good in the economic times we’re in,” Tankersly said. “We’re not growing government, we’re keeping government small and fiscally sound. We’re actually staying on track. We’re at a single-digit — 4.5 percent — increase in sales tax revenue, but it’s only about a 3.5 percent increase over budget, so it’s not a lot. You can also see that sales tax doesn’t keep up with the personnel benefit costs. Even though we’re holding fine, operationally speaking, the operational cuts we’ve make to offset the (benefit) growth are why we’re able to hold our own.”

While Wasilla enjoyed double-digit annual growth in sales tax revenues about a decade ago, those days are long gone, Tankersly said.

“We’re not there today, and I don’t anticipate us being there again,” he said. “We all know that the Mat Valley is climbing as far as population goes, but will we see double-digit sales tax growth again? Also, the (federal and state) dollars coming in are shrinking.”

That’s also reflected in an overall decrease in investment earnings for the city of $114,216, which is a result of the continued decline of interest rates, the report says.

One of the biggest reasons Wasilla has been able to weather the recent tough economy is by keeping personnel costs in check, Tankersly said. Benefits for employees continue to become more expensive and the city has three unions to bargain with as well.

“Unions have a dramatic affect on personnel (costs),” he said. “There are costs associated to personnel a union will strive for. It’s a negotiating process, and the whole trick is to come to some agreement.”

Personnel is by far the largest chunk of the city’s budget, he said, with some departments attributing up to 80 percent of their budgets to personnel.

Wasilla City Council will review the fiscal year 2011 audit at its regular meeting Monday. The meeting starts at 6 p.m. An agenda for the meeting and downloadable copy of the financial report are available online at cityofwasilla.com.

Contact Greg Johnson at greg.johnson@frontiersman.com or 352-2269.