Palmer’s good news: City’s costs rise, but so do revenues

Alaska’s economy is moving in the right direction after the pandemic. So are prospects for the city of Palmer.

City manager John Moosey briefed Palmer’s council on the city’s new budget proposal at its meeting last Tuesday, Oct. 25 as the budget was introduced. Public hearings will be held before it is formally adopted.

The good news is that revenues are estimated to be up enough to offset rising costs. That’s thanks to expected good sales tax collections based on the summer 2022 visitor and special events season.

Revenues are estimated to increase by $1.7 million from $12.2 million this year to $13.6 million next year.

Sales tax revenue through September are up 12 percent compared to the same time last year,” Moosey said in a letter to the council.

Expenses, meanwhile, are expected to rise $991,500 from $12.6 million to about $13.6 million, which includes a 3 percent cost of living adjustment for city employees. This does not include capital expenditures, however.

On the operating side the 2023 budget is balanced with a small surplus of $38,000.

Moosey said Palmer has met the challenges of the COVID-10 pandemic thanks to the acumen of local business leaders and the state and federal funding that helped put the city on solid footing.

“The business community of Palmer has exceeded expectations,” the city manager said. “The city of Palmer has become Southcentral Alaska’s ‘home town’ by hosting great events and festivals such as Colony Days and Colony Christmas, the Alaska State Fair, Friday Flings, the Scottish Highland Games, the Great Alaskan Aviation Gathering and the Professional Rodeo Tournament,” he said.

“These events drove additional traffic to our city. With our town’s success we are welcoming many more new visitors and participants,” he said.

However, “the new influx of folks has placed a burden on city services and service delivery,” which increased costs.

The proposed budget includes incremental increases across most city departments due to living cost adjustments in salaries and higher insurance costs. City agencies that serve visitors, which are again expected to be up, will experience higher janitorial costs. The facilities include Palmer’s community center and depot, and its visitor center.

One substantial increase will be with the police department, which will see an increase from $2.84 million to an estimated $3.24 million due to the addition of one patrol office as well as living cost adjustments, overtime and higher costs for fuel, small tools and equipment.

The police budget includes the jail, animal control and buildings for police and state trooper support.

In the city’s special enterprise funds, such as for water and sewer, 5 percent increases for both water and sewer are built into the proposed city budget. There is also a 3 percent service fee on water and sewer accounts located outside the city limits.

City water and sewer revenues are estimated to rise to $3.7 million in 2023 from $3.47 million in 2022. Water utility expenses are expected to rise from $1.25 million in 2022 to $1.284 million in 2023. Sewer utility expenses are projected to increase from $1.57 million in 2022 to $1.65 million in 2023, according to the proposed city budget.

City solid waste fees will also rise 5 percent under the budget to keep up with fee increases as the Matanuska Susitna Borough landfill. At the Warren “Bud” Woods Palmer Municipal Airport tie-down fees are planned to increase 5 percent, according the budget.