City of Ketchikan Mayor Lew Williams III gave his annual State of the City address Wednesday at the last Ketchikan Chamber of Commerce lunch of the year.
Williams was cautiously optimistic about the city. He cited challenges such as reduced state financial aid and aging city infrastructure, but Williams also stressed the city’s strengths, such as a diverse economic base and new opportunities opening up at the shipyard and in the mining industry.
Until those opportunities pan out, though, Williams said the local economy likely will remain flat.
“The economy peaked around here in 2008, and since then it’s been flat,” he said. “I talked to some bankers and economist just another month ago and asked, ‘What’s the forecast for Ketchikan?’ They said it’s flat. That’s not bad. We could be in recession, we could be going down.”
Williams cited the national economy and federal regulations among the reasons for a flat economy here. He also noted that the state is facing financial problems, too, with falling revenue due to low oil prices.
Williams said he talked with Gov. Bill Walker recently, and the governor was blunt about the lack of state revenue and the need to drastically cut spending.
“The other thing we can expect, I talked to Ray Matiashowski, our city lobbyist, yesterday, and they’re expecting the $500,000 in revenue sharing from the state will be gone for us, too, next year,” he said. “So that’s $500,000 that we’ll have to figure out how to do without.”
Low oil prices will affect the city’s sales tax revenue, too, Williams said, because the price of gas is lower. But, he said, the community is in good shape to sit out a flat economy, because of its financial diversity. Williams mentioned fishing, tourism, the hospital, the shipyard, various construction projects and government agencies such as the U.S. Coast Guard and the Alaska Marine Highway System.
Williams talked about the city’s 2015 budget, which is in the final stages and likely will be approved on Thursday. He said there are no tax increases, but some fees are going up, such as wastewater and harbor rates.
For Ketchikan Public Utilities, there will be no electric rate increase, some rates will go up for the telecommunications division, and the city is looking at a water rate increase.
Speaking of water, Williams said increasingly strict federal regulations are costing the community a lot of money.
“Every time you listen to news and hear someone say ‘Clean Water Act,” cringe, because that’s going to hit you in the pocketbook,” he said. “Every time they change water standards, it comes right to your hometown.”
The city recently completed a new $10 million water treatment plant to address regulated byproducts in city water. But that new plant hasn’t completely solved the problem. Williams said he really hopes that a tweak to that system, estimated at $1.3 to $1.7 million, will fix the problem.
If it doesn’t, the city faces the probability of building an expensive filtration plant. When asked whether he regrets not building one many years ago, Williams said the new regulations couldn’t be predicted, and the city’s water has changed in recent years, making the problem worse.