Mayor Mark Begich remarks
Fiscal 2006-07 Budget Presentation
1 p.m.; Oct. 3, 2005; Mayor’s Conference Room

Good afternoon – thanks for being here. Today we present the city’s first biennial budget, proposed for fiscal 2006 and 2007.

For the second year in a row, I’m relieved to describe these budgets as living within our means - with some significant additional investments in public safety.

A stable, predictable budget is a welcome change after the unprecedented budget gap we inherited when we first came into office.

Our budget proposal continues to deliver on one of the most important services any city can provide its citizens – ensuring their safety in their homes and on our streets.
It adds 20 new police officers and other personnel. It provides full funding for 13 School Resource Officers, whose cost had been partially covered by a federal grant. It funds electronic communications in support of the police and fire departments.

This budget also continues to provide property tax relief - more than 5 million-dollars for the coming year. We are using the entire 5 million-dollars which the Legislature provided earlier this year to offset the cost of employee retirement obligations for property tax relief. This continues our policy of not using one-time money for continuing obligations.

This budget proposal is unique in another way. For the first time we are proposing two annual budgets at the same time. The biennial budget, which I proposed as a candidate, increases predictability, efficiency and broader public understanding. I know this also has been a priority of Assembly Chair Anna Fairclough. We may be the only local government in the state doing a two-year budget.

The 2006 budget proposal is a dramatic contrast to the first one I proposed as mayor two years ago. Then, we faced Anchorage’s most severe budget challenge since the oil price crash of the late 1980s with a $33 million budget gap.

Thanks to the sacrifice of city workers, the cooperation of the Assembly and some tough budget decisions, we balanced the 2004 and 2005 budgets and put our city’s finances on the path toward stability.

This budget reflects the three priorities Anchorage residents tell me they feel most strongly about: public safety, transportation, and economic development.

It funds essential public services, from road maintenance to public health. It provides for modest but targeted investments in necessary public facilities, especially roads.
After years of increasing the burden on property taxpayers, this budget continues to reverse that trend.

Two years ago, 59 percent of the city’s budget came from property taxpayers. That was a 12 percent increase since 1988, when just 47 percent of city services were financed by property taxes. Under this proposal, the reliance on property taxpayers to fund public services continues to drop, to 56 percent, as we diversify the city’s tax base.

Let me hit the highlights of our budget proposal.

This 362.5 million-dollar budget is an increase over the current year – about 29 million-dollars.

The biggest factors driving the budget are the increased cost of health care and retirement. As with every major employer, the cost of health care is skyrocketing - up 13 percent over last year.

And statewide, the cost of the public employee and teacher retirement programs are a huge liability to the State – more than 5 billion-dollars.

Our Fiscal ’07 budget anticipates the city’s contribution toward public employee retirement at more than 23 percent, compared to just 8 percent last year. In hard dollar terms, the amount required for retirement cost is jumping from 13.5 million-dollars in Fiscal ’05 to 29 million in ’07.

As I mentioned, we propose the addition of 20 new police, which will cost 1.2 million-dollars in 2006, for partial year funding.

You’ll remember that when we came into office, we directed a major review of our police department. It found that Anchorage is 93 officers short of where our city should be to protect the public. We’ve embarked on an ambitious effort to rebuild the Anchorage Police Department.

We’ve added 55 new police officers in two and a half years. With retirements and other departures, that results in a net gain of 21 officers, the largest increase in years. We’re aggressively recruiting for new officers, especially those from minority groups to better diversify the force.

Our proposed ’06-07 budget also includes significant areas of cost-savings.

Thanks to the Cooperative Purchasing Authority approved by the Assembly, we project nearly 2 million-dollars in additional savings by 2007 from the way we purchase equipment and supplies.

Unfortunately, a major new cost we have to absorb for the coming year is the price of fuel due to record high oil prices. We estimate that increased cost at three-quarters of a million dollars.

On the capital budget, you’ll see a continued emphasis on our highest priorities – relieving traffic congestion. We propose a transportation bond of about 43 million-dollars.

Next year’s bond will focus on traffic congestion relief at some of our busiest roads – 100th Avenue, 84th, Spenard, Spruce Street, among others.

We also will be asking voters to approve a parks and recreation bond for the first time in several years. Traditionally, these bonds have a tough time with voters.

But I’m confident they will support the modest investment – about 3.7 million-dollars worth – to maintain and improve our existing parks, trails and recreation facilities to make our community a better place to raise a family. These bonds will be matched with contributions from the private sector and other sources.

On municipal utilities: they all continue to be reliable and profitable. My goal is that every city-owned utility show a return to their owners – the taxpayers of our city.

As is always the case, this budget is a work in progress. Our presentation today starts a process which will continue over the next six weeks until final Assembly approval on November 22nd.

On Friday, the Assembly holds its first work session on the budget. That begins its own process of examining it, asking hard questions, and hearing from the public. We’ll be fully engaged in that entire process.

Now I’m pleased to answer any questions . . .

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