Municipal Leaders ‘Frustrated’ Over State Budget Cuts, Legislators’ Failure to Fix Budget

Nov 15, 2017

Hundreds of local government officials from around the state are in Anchorage this week for the Alaska Municipal League’s annual local-government conference. At the top of their agenda is finding ways to deal with cuts in state funding that in turn have forced the municipalities to reduce services and raise local taxes.


Fairbanks Mayor Jim Matherly says he’s frustrated that lawmakers were unable to come to an agreement to keep the state budget from bleeding more red ink before the Senate adjourned last week from this year’s fourth special session. And he says his counterparts at the AML conference feel the same way.

Fairbanks Mayor Jim Matherly: "It's basically all about accountability."
Credit City of Fairbanks

“There are 43 mayors in that room,” Matherly said during a break in a meeting. “And every one of them is frustrated.”

Denali Borough Mayor Clay Walker says that’s because all the municipal officials must now deal with another year of reductions in state funding and few specifics on where those cuts will be made.

“It’s definitely a universal concern, throughout Alaska’s municipalities, Walker said. “From small to large, from public safety to roads, the impacts are numerous.”

Walker says the municipal league and the Alaska Conference of Mayors have for two years now both called on the Legislature to adopt a triad of measures to deal with a state budget that’s been battered by years of plummeting oil revenues.

“The three-legged approach, as most people who’ve looked at this issue have recommended,” Walker said.

That includes cutting the state budget and using money from the Permanent Fund earnings reserve, but also to come up with a way to raise additional money to fill some of the gap left by the loss of oil revenues – such as Gov. Bill Walker’s proposal to implement an income tax, which the state Senate refuses to consider.

“The number-one priority of the AML is that the state get its fiscal house in order,” the mayor said.

Denali Borough Mayor Clay Walker: "The number-one priority of the AML is that the state get its fiscal house in order.”
Credit Alaska Municipal League

Municipal League Executive Director Kathy Wasserman says lawmakers’ failure to find any other way of dealing with the fiscal crisis, besides more budget cuts, is forcing local leaders to figure out ways to fill the gaps in state funding. She suspects that’s at least partly due to lawmakers’ re-election concerns.

“They seem perfectly content with us taxing the people of Alaska,” Wasserman said. “So I’m thinking it’s not the people of Alaska they’re worried about – it’s the Senate they’re worried about.”

Matherly says he and pretty much every other municipal official think senators are stalling, forcing municipal leaders to make tough choices while they hope for oil prices to increase.

“There’s a general consensus that maybe they just want to float along, live on the savings – which is just under 2 billion (dollars) – and not get to work,” he said.

But Matherly says local leaders can’t pass on their responsibilities to keep cities and boroughs solvent while providing important services – albeit, at a reduced level. Unlike, he says, the Legislature’s recent tendency to leave hard decisions to multiple special sessions.

“I can’t go to the Council and ask for more time. Then more time. Then more time,” he said. “I have to produce.”

Matherly says municipal official know that more state-funding cuts are coming. He says that’s why he asked voters to allow the city of Fairbanks to exceed the borough’s tax-revenue cap in the October 3rd local election. And he says when that measure failed, he submitted a budget to the City Council that included cutting five positions and laying off two firefighters.

AML Executive Director Kathy Wasserman: “They (Legislators) seem perfectly content with us taxing the people of Alaska.”
Credit Tim Ellis/KUAC

“It’s basically all about accountability,” Matherly said.

Wasserman says many municipal leaders will be facing hard choices as to which services that citizens depend on will be preserved – and which will be cut or eliminated.

“Keeping city halls open,” she said. “Keeping the trash picked up. Keeping the fuel going, and the roads plowed.”

Matherly says leaders of small communities told him more budget cuts will hurt them even more.

“No VPSO,” he said, referring to Villages Public Safety Officers. “Nobody to watch over the crime. Depression in some of these villages. Suicides. It’s absolutely terrible. And they feel completed ignored and forgotten by Juneau.”

Matherly, Walker and Wasserman all say they hope to get at least some answers from a group of six lawmakers that’s scheduled to talk with the conferees on Thursday. Meanwhile, they say, they’ll continue to exchange ideas on how to do more with less in their communities.