The Ketchikan City Council continued its review of the draft City of Ketchikan and Ketchikan Public Utilities budgets during a special meeting on Monday.
The council wrapped up the city budget review during that meeting. Before starting the KPU review, City Manager Karl Amylon gave a summary of his transmittal letter.
He said that, like the city budget, the proposed KPU spending plan calls for maintaining current service levels, a 2-percent cost-of-living adjustment for employees, and no rate increases except for an already-planned 35-percent water rate hike for seafood processors.
Also like the city budget, though, Amylon said it’s not sustainable for the city to maintain current rates, because costs continue to rise. He said the council should review the KPU rate structure with those costs in mind.
“The need for such a review will only become more critical depending on the outcome of the 2018 compensation plan update and what if any determination is made by the city council to implement the results,” he said. “When added to the other challenges outlined in the transmittal letter, additional financial resources will be required.”
It’s expected that the compensation plan update will show a need to increase salaries for many positions throughout city government.
Revenue that provided a profit for KPU in 2017 will drop, Amylon said. KPU’s Telecommunications Division, for example, had to renegotiate its contract with Verizon. Providing that service will continue to make money, he said, just not as much.
The water division operates at a loss, he said, and there will be big capital investment projects coming up for telecommunications and electric. Those will increase capacity and reliability for internet bandwidth and backup diesel generation.
During council discussion, City Mayor Bob Sivertsen suggested some revenue increases for the council to consider.
“A 5.5 (percent) rate increase for the water division, that’s an additional $150,000, which really isn’t much in regards to capital projects, equipment and replacement costs,” he said. “And then the electric division, I think we need to look at something like 3.5 percent to generate about $615,000.”
Sivertsen also suggested a 0.8-mills property tax increase. The current mill rate for the city is 6.6.
Council Member Janalee Gage asked how much all those increases would cost individual residences. Amylon said he would bring those numbers back to the council during its next budget work session.
That next session is Thursday. If the council does not wrap up its budget review during that meeting, another special meeting is scheduled for Monday. The council is expected to approve both the city and KPU 2019 budgets during its regular meeting on Dec. 20th.
All council meetings start at 7 p.m. in City Council chambers at City Hall. Public comment is heard at the start of each meeting.