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 Sullivan: Preliminary 2011 Revenue Estimates Show Budget Gap 

 Report to Assembly lays out revenue and tax scenarios 

9/1/2010 | Contact: Sarah Erkmann (907) 343-7103
Mayor's Office

ANCHORAGE- Mayor Dan Sullivan today provided a report to the Assembly of 2011 revenue estimates, as well as tax limit calculations.

The estimated cost to finance current services in 2011 is $448 million, which creates a gap between estimated revenues of $18 million (if a 3 percent increase in property taxes) and $8.5 million (if an 8 percent increase in property taxes).

Preparation of the 2011 budget is underway, though no formal decisions have been reached. A proposed budget is due to the Assembly on Oct. 1.

“I said last year that we would embark on a two-year plan to return us to fiscal stability,” said Mayor Sullivan. “This year’s budget will again require difficult choices about what services to provide and at what level. Unfortunately, revenues are unable to keep pace with the increased costs of running the city.”

A dedicated effort to find savings by identifying efficiencies is ongoing. It takes time to restructure government and its processes; as a result, savings likely will not be realized until next year’s budget.

Major factors complicating the 2011 budget are the pay raises mandated by the municipal labor contracts, increases in the cost of employee health insurance and obligatory contributions to the police and fire retirement fund.

Sullivan says he is keenly aware of the strain many Anchorage residents are under. “I hear from citizens who have seen salary reductions of 10, 20 percent in the past year because of the economic slowdown,” he said. “It’s clear to me that now is not a good time to raise taxes by double digits, especially given the 36 percent increase in taxes already imposed on taxpayers earlier this decade.”

“Our personnel costs also have increased 66 percent during the last ten years, which is a reality we have to deal with given that our revenues have not managed to keep up,” Sullivan said.

Community members recently were asked to weigh in on potential revenue shortfalls and tax scenarios during the city’s community budget dialogues. A final report detailing the results from all four budget sessions is expected later this month.

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