Nome Common Council continues FY21 budget process
In a work session on Thursday, April 30, the Nome Common Council convened in person and by phone in a budget work session to go over budget for the next fiscal year, starting July 1.
In a previous work session prior to the April 13 regular meeting, the Council began hearing of the budgetary needs of the Nome Police Department and will further address NPD’s budget in a work session on May 11.
Councilman Mark Johnson led through the meeting, with Councilwoman Jennifer Reader also present. Due to social distancing mandates, the other councilmembers Adam Martinson, Jerald Brown, Meghan Topkok and student rep Molly Kenick attended telephonically. City Clerk Bryant Hammond and City Manager Glenn Steckman were on hand to answer questions, as was Public Works Director Joe Horton.
Acting Finance Director Nickie Crowe called in and walked the Council through the numbers. Discussions sidetracked to the impact of COVID-19 closures on the City’s coffers.
With the outfall from lost business during Iditarod and into April during the COVID-19, Crowe could not yet put a number on sales tax loss but she said that from the beginning of the fiscal year in July 2019 until February 2020, the City saw a bit over $4 million in sales tax. Steckman reported that the City anticipates the revenue to go down, but at the same time the sales tax revenue from the grocery stores went up. “We don’t know the full impact on it until June when we see the collections from April, when business slowed down significantly,” he said.
According the draft budget packet in front of Councilmembers, the overall revenue is projected to at nearly $12.5 million. Assumptions are that the FY21 tax base is up from FY20 and is estimated at a total of over $357 million in taxable real estate property and personal property. The finance director expects a sales tax decrease of ca. 2.7 percent, a hotel tax decrease of 25 percent, a Rec Center revenue decrease due to no rental and no summer programs and a decrease in museum admissions by 25 percent. The mill rate is assumed to stay at 13 mills
Overall expenditures are estimated to be $13,473,954, creating a budget deficit of $ 1,026,547.
As for expenditure assumptions, Crowe estimated savings of $142,000 in salaries and benefits due to a hiring freeze during the COVID-19 pandemic. The contribution for Nome Public Schools is assumed to be $3 million, $65,000 to the Nome Preschool Association and snow removal expenses are projected to decrease by $30,000.
The finance director position is still vacant, as was the Nome Police Chief position.
However, in last week’s Council meeting Steckman announced his recommendation to hire Interim Chief Mike Heintzelman. Contract negotiations are in the works and Steckman said he’d have a contract on the table for the council to review at the next regular meeting on May 11. Steckman also asked to brief the Council in an executive session on findings relating to the Nome Police Department.
Back to the budget.
The Public Works department’s budget was discussed at length. Budgeted are tools for boiler maintenance, new gravel for the softball field and two new bus shelters and funds for deep cleaning of Old St. Joe’s and the Mini Convention Center, a Toyo heater for OSJs and the replacement of one possibly two freezers at the Mini Convention Center.
Public Works Director Joe Horton lobbied for the purchase of a new loader in the amount of $343,480. Horton said during snowstorms his department has only one functioning loader and it typically goes north to service Icy View, areas north, Lester Bench and back to Icy View. The department has three loaders, one is at all times at the landfill. He said if he had a second functioning loader, it could hit the other places in Nome at the same time. In the summer time, when there is less demand on the loader, he said, it could be shared with the Port of Nome.
“Ours broke down and we had to lease one. Every time it storms and after storms, we are short because we only have on loader,” Horton said.
Steckman explained that the city outsources to local businesses and leases a loader when needed. Discussion ensued if it would not make sense to lease loaders from local equipment fleets and not have to carry the cost for purchasing, maintenance and insurance. Horton said it costs $4,000 per week to rent a loader. Jennifer Reader voiced that the purchase of a new loader in these times is a big expense and asked for a cost-benefit analysis versus renting or leasing the equipment. Mark Johnson didn’t want to debate the need for a loader, but said that in times of budget shortfall, it would make sense to lease loaders rather than buying one. Horton explained that some leased equipment doesn’t have the implements that are needed. He also said that the 2012 loader is used to attach the snowblower that is used to remove the snow from the streets and onto a dump truck. Jerald Brown wanted to see the numbers and asked how much was spent this fiscal year on renting equipment and if it was available when needed. The 2019/2020 winter did not see the extreme snowfall as last year and that was reflected in the numbers. Last winter, $124,000 was spent on snow removal, compared to $39,000 this winter.
Horton also reported that as his department grades the roads, it puts down calcium chloride to keep the dust down. Horton said the city has a supply of two and a half conexes filled with calcium chloride and are researching measures on dust control in below freezing temperatures. Steckman commented that he received a note from Austin Ahmasuk, who complimented the city on its proactive measures.
Budget highlights for other departments included a new treadmill for the Rec Center. Steckman said that he plans the gradual opening of the Rec Center in phases. Phase one may include the opening of the weight room, with appropriately spaced exercise equipment. The bowling alley may open in August or September. There are no plans yet on opening shower and sauna facilities.
The pool is in need of temperature control repair.
Funding for the Chamber of Commerce to operate the Nome Visitor Center remains flat at $200,000.
As the two percent increase from five to seven percent in sales tax took effect again on May 1, Councilwoman Jennifer Reader asked if the seasonal increase of sales tax could be suspended. Mark Johnson added that he hears from people wondering about their increased property bills. City Clerk Hammond clarified that the mill rate didn’t go up, but the assessments on properties increased. He pointed to the mechanism in place that allows property owners to appeal and bring their objections to the board of equalization. Hammond also said that the two percent increase was approved by voters in 2016 and it survived a referendum in 2018. It is now by ordinance that each May sales tax increases and decreases in September again.
But the City is not in the position to give breaks in terms of sales or property taxes. Steckman said the City works with the Nome Chamber of Commerce to encourage businesses to take advantage of federal programs such as the Paycheck Protection Program or the Economic Injury Disaster Loan. “We work with businesses if they can’t pay their sales tax, right now, because they decided they pay their employees,” Steckman said. There is a real concern about bringing employees back. “We talk with local and regional businesses and they say some of their employees rather quit than come back to work and be potentially exposed,” said Steckman.
The Council will comb through the budgets for the Port of Nome and the Nome Police Department in a work session on May 11.