Palmer city doing well, but headwinds loom in rising costs, supply chain

Things are going well for the city of Palmer, though there are still headwinds.

“The city has successfully weathered the COVID-19 worldwide pandemic,” city manager John Moosey told Palmer’s mayor and council.

Federal funding has assisted city operations and budgetary issues. Local businesses are doing better, too.

“The business community of Palmer has exceeded expectations with a vibrant summer of events and festivals,” Moosey said in a letter accompanying the city’s new budget proposal to the mayor and council.

“Many activities returned such as the Alaska State Fair, Scottish Highland Games and Colony days. New events have also arrived like the Great Alaska Aviation Gathering and the Professional Rodeo Tournament,” he said.

‘However, there are significant headwinds,” he warned.

“We have already been affected with the broken supply chain regarding vehicle acquisition. This issue is expected to be an issue throughout 2022. Cost of living is expected to increase at a 6 percent rate and fuel expense has already risen by over 40 percent.

But city finances are in good shape. While expenses are up, revenues are up more.

This proposed budget (for FY 2022) as presented has expenditures at $12,170,370, which is up $557,646 from the adopted 2021 budget, minus capital funding,” Moosey wrote.

However, estimates of sales tax revenue for FY2022 are higher from 2021. “Sales tax revenue is estimated at $8,250,000 for next fiscal year. Sales tax revenue through September 2021 (the first quarter of FY 2022) is up by 20 percent compared to the same time last year,” he said.

Sales taxes are Palmer’s major source of revenue. Other city revenue, such as fees for services and revenue shared shared from other governments, makes up the difference between Palmer’s total income and expenditures.

The sales tax revenue increase is due to new revenue from online sales made from within the city, through the new Alaska Remote Sellers program that allows Alaska municipalities with sales taxes to levy taxes on sales made over the internet.

Meanwhile, Palmer’s city council has been digging through the details of the city’s budget for next year. At its Tuesday, Oct. 26 meeting council members and city officials discussed issues with community development, which includes parks and recreation, and public works, which includes sewer, water, roads and street lights.

This is the everyday stuff that makes small towns click.

In general, things are going well. “When my phone isn’t ringing, I know there’s no problems,” public works director Jude Bilafer told the council.

The council reviewed other departments in a previous meeting.

Requests for budget increases across city departments are modest and generally in line with inflation.

Community development director Brad Hanson has asked for money for a cost-of-living pay increase for Palmer museum worker that was deferred earlier.

A contractor providing weekend cleaning at the xxx depot has asked for a rate increase. This is for three hours a day on weekends.

“Keeping the bathrooms clean on weekends for community events is important,” Hanson said. It’s even more important in summer when Palmer puts out the welcome mat for out-of-town visitors.

There are some requests that are larger, mostly for capital expenditures. Seventy thousand dollars is needed for a new sidewalk at Palmer’s library. “The existing one is a mess,” Hanson said, a nuisance and even hazard for library patrons particulary the elderly and people using the library in winter.

Eventually a repaving of the library parking lot is needed, he said. For efficiency this might be combined with the sidewalk repair.

Council members asked about the library’s curbside pickup and drop-off services instituted last year as a COVID-19 protection.

Hanson said the service was very successful to the point that library director Beth Skaw hopes to continue it.

“Curbside service has been a real benefit for the elderly, moms with toddlers and patrons who are very COVID-leery,” he said.

Hanson also credited Shaw for operating the library last year with not a single case of COVID-19 among its staff of full-time and part-time employees despite a lot of interactions with the public.

There are routine cost increases in city operations, however, such as $85,000 for vehicle maintenance including repairs for a damage police patrol cruiser and for used vehicles acquired from the Mat-Su Borough,Jude Bilafer, the city public works director, told the coucil.

The vehicles from the borough came at a bargain price but aso with maintenance costs. Still, even with the repairs there is less expense than buying new vehicles., Bilafer told the council

There are other new costs this year, such as to install street lights and other safety features on street serving two new subdivisions, Bilafer said. These are the expenses that come with growth.

New lighting and a new traffic light are also planned for access roads for the newly improved and expanded Glenn Highway through Palmer as well as a rebuilt city street to the state highway.

There are also higher expenses like crack sealing on streets, where there are cost increases that are driven mostly by the higher price of oil, which is a component of the sealing material.

Bilafer also complimented the inventiveness of city employees in dealing with problems.

One examplehe cited was when a rented pump at the waste treatment plant broke down which itself was being used when the original pump broke. Two city workers fabricated a part to get the pump working again, a demonstration of commitment to their jobs, Bilafer said.

Things are going well for the city’s events and activities center. Last summer saw an upswing in activity over the previous summer, with events like proms and auto shows, and a modest fee increase is putting the center on a better financial footing.

There are maintenance needs, however. City officials are asking to establish a $50,000 fund for a floor replacement, although this will likely be done in increments like $15,000 a year in improvements.