City of Craig New Fees and Rates + the 2018 Operating Budget - P.O.W. Report

Monday, September 11, 2017

City of Craig New Fees and Rates + the 2018 Operating Budget

Here's is the general information you need to know about the City of Craig Fiscal Year 2018 Budget [Source]:

Sales Tax 

The Sales Tax comprises the majority of the city's budget. Since 2014 Craig has had decreasing sales tax receipts and anticipates that this will continue through the near future. The 2018 budget however assumes a 'slight increase in sales tax receipts, to $1,619,000, which is about equal to the total sales tax receipts received in FY 2012 and FY 2016.

Property Tax

Property tax revenue has climbed $180,000 in the past 10 years due to new construction and property value appreciation, however, the property tax rate of six mills has not changed in more than 25 years. 

Combined the sales and property tax revenues for 2018 makes up 68% of the entire city revenue or about $2.241 million. 

Other Revenue Sources

The city typically receives a substantial amount of transfer payments from the US Government and the State of Alaska each year. The projected amount of state payments for 2018 is $414,342. These payments come mostly from the following sources:

1. Raw Fish Tax
Due to the closure of the Silver Bay Seafoods plant in 2016, the city expects a $200,000 reduction in raw fish tax receipts for the coming fiscal year, from $250,000 down to $50,000. The decline in raw fish tax, plus the downward trend in sales tax receipts are the two largest factors driving down General Fund revenue to Craig. 

2. State Revenue Sharing
The State of Alaska has funded the municipal revenue sharing program for the past decade. This was recently changed in statute by the Alaska Legislature and uncertainty remains how it will effect cities such as Craig.  For the coming fiscal year, the revised program will generate about $90,000 and will decrease in the near future.

3. Contract Jail Payments
The city holds an agreement with the State of Alaska to operate a contract jail facility at the Craig Police Department. Funding for the program was cut sharply for FY2016, but the high number of man days in the Craig jail resulted in Craig having to endure a much lower cut in payments than a number of other communities. For FY2018, we are told by the Department of Corrections to expect payments about equal to the current fiscal year, so we anticipate no drop in revenues for contract jail payments.

4. Payment in Lieu of Taxes
The city plans for a $30,000 reduction in PILT payments for the coming fiscal year from our current fiscal year payment of about $300,000.

New Revenue Sources

Craig has been very good about trying to keep a balanced budget. However, due to the decreasing revenue the city made two major changes to the sales tax code which was effective July 1, 2017. 

1. Raise the qualifying age for senior sales tax exempt card to 65. 

The current qualifying age for the sales tax exempt card is 60 years old. Raising the qualifying age to 65 may increase revenues by as much as $33,000. Note that I expect that seniors who currently hold an exempt card, but are not yet 65 years old, would continue to qualify or the exemption. 

2. Eliminate exemption of sales where the good or service sold is delivered out of town. 

Currently a sale made in Craig where the good or service is delivered outside of town by the vendor is tax exempt. Changing this exemption to apply only to goods delivered by the vendor to a common carrier still maintains the exemption for some sales but eliminates the exemption for all other out of town deliveries. This change may increase sales tax revenues by $79,000.

3. Monthly Water and Sewer Rates
Staff proposes to increase sewer and garbage charges by five percent in FY2018, but also proposes to eliminate the sale tax charge on utilities, so the net increase to rate payers is zero. Staff will increase the rate for water service in keeping with council direction to raise water rates in an attempt to match the department’s expenses.

4. On the Ballot this Year:  5% increase on the Marijuana Tax

5. On the Ballot this Year: $5 per day Bed Tax/Transient Room Tax

Reduction in Service Delivery and Expenditures

One result of the attached budget is reduced services to the public. In order to save labor costs, the Craig Aquatic Center will close at 5:00 p.m. three nights per week, and will remain closed on Sundays, reducing the pool’s open time by 7.5 hours per week. Aquatic Center manager Jessica Holloway plans to remain open later two evenings per week to accommodate pool patrons who tend to use the facility later in the day.

The Craig Public Library will offer fewer new circulation materials in response to the lower city budget. Other departments have made reductions as well, often delaying replacement of some items. While the budget will largely work for the coming fiscal year, the low levels of funding for non-staff costs in the city departments will not sustain the level of services that the city delivers. Absent evidence from the public that the city should significantly reduce its service levels, the council should implement new revenue options to maintain existing services.

Overall, the city’s expenditures are projected to decrease $117,000 from FY2017 to FY2018, and decrease $403,000 since FY2016.

Jon Bolling, City Administrator Writes:

As I have stated in years past, department heads in the city’s enterprise and general fund departments have done good work in controlling their expenditures. They understand the demands placed on the city’s General Fund and Enterprise Fund revenues and responded productively again this year when I asked them to further reduce their expenditures from the current fiscal year. It is a pleasure to work with them.

As I have noted in past cover memos to the budget, thanks to thoughtful actions taken by city councils in Craig over the past 15 years or so, pertaining to building capital projects and efforts to build savings, the city is in good financial condition. With lean financial times upon us now and likely for the next few years due to declining sales tax receipts, and transfer payments from the State of Alaska and US Government, the city’s good financial position will make dealing with reduced revenues easier. Even so, we should continue to anticipate difficult financial circumstances for our community. 

City Administration Budget 2011-2018

Aquatic Center Budget 2011-2018

City Council Budget 2010-2018

Library Budget 2011-2018

Police Budget 2012-2018

Public Works Budget 2012-2018

Read More: Cody Schwegel is Officially Running for the Craig School Board. Read His Bio!

Send a tip or a story to

Subscribe to all posts by email:
Enter your email address:

Delivered by FeedBurner

Donate just a dollar a month to keep this site running!

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.