Overall and looking at the bigger picture, the City of Seward is in excellent financial shape, but the citys population is in decline and the cost of doing business in Seward has dramatically gone up in the last two years.
In the 2004-2005 Seward Annual Financial Report, the following information was reported:
Revenues over Budget Expenses Under Budget Unbudgeted Surplus
2004 $274,746 $432,937 $707,683
2005 $576,138 $478,750 $1,762,571 (Incl 2004)
In the 2006 I am sure the numbers will bear out our grossly under budgeted income (with the increases-doubling in fact- in gasoline and diesel fuel prices) the corresponding increases in sales tax, bed tax with the increase of hotel rooms and occupancy in Seward, and interest income with the higher interest rates.
We have a huge surplus of capital for reinvestment within our own city not New York! The need for that re-investment, just looking at the numbers alone, bears this out.
Our real depreciation in 2005 was $2,817,860 and the capital outlay was only $1,683,258 with a shortfall of $1,134,602– which translates into much needed repairs such as repaving for 4th Avenue and other city streets. If we do not take advantage of the paving machines while they are here in Seward next spring, we lose a huge opportunity and cost savings to get the much needed repairs completed in a timely and costly manner.
Lets next consider the City Cash and Investment Accounts:
We have strong reserves and I believe the prudent action would be to start reinvesting some of those funds back into the community and not Wall Street.
At the last city council meeting I attended, the city manager was quoted saying that there was no increase personal which is very misleading when salaries (page 22) are going from $2,724,994 to $3,383,582 for a 24% or $658,638 increase above the 2005 actual numbers.
The budget is a re-run of the same thing I have been seeing ever since I moved to Seward. The grossly understated income and the overstated expenses are all hiding under the mantel of well we have to be conservative. What the council should have and expect is an accurate budget truly reflecting what the numbers are going to be and based on the past history of citys financial department under reporting the city’s cash flow- we are not in any kind of financial crisis and never have been!
The interest income is consistently under estimated just to name one income item. Another is (pg 25) sales tax which states in the report that On average, taxable sales revenue has increased 9.48% per year over the last 5 years. Yet the budget sales tax increase is only 2.6% over the 2005 actual.
I did not see in any where in the budget or notes of the past PERS reimbursement from the state or the reasonable assumption that the majority of the PERS payment will be reimbursed by the state. I respectively disagree with some comments and direction from the administration in pervious work sessions in that I believe we can count on the State of Alaska for assist with the PERS problem up to 75% this year and certainly along the same lines for 2008.
The State of Alaska created this problem and we should continue to do everything in our power to make sure they take care of this problem of us.
There is too much crisis management attitude in the budget process and if the city manager and finance director would address some of these issues before the budget comes out, we could focus on what is really important like the issue of Sewards reinvesting policy back into itself- such as street improvements and real economic development. The direction to take I believe is reverse the current trend, leave taxes alone (the last sales tax increase only passed by one vote), and reinvest a portion of the surplus back into the City of Seward.