HomeMy WebLinkAbout1970-03-09 Council Minutes - Work SessionNOTES ON COUNCIL STUDY SESSION, FINANCIAL MATTER 7:30 P.M. 3/9/70
Present - Councilmen Bailie, Bielefeld, Hulien, McCollum Malone and Mayor Morin,
Also City Mgr. Robbins, Treas. Burt, KCL Supt.Wergt, DPW Asst. Dir. Jaynes
and W&S Supt. Massey.
Burt submitted a memorandum to Council outlining expected deficit by
7/31/70 amounting to $128,307, plus the General Fund's share of the audit state.
ment, $4,775 = $133,082. This deficit is an accumulation of excess spending
over income dating from 1966-67 to the present.
Burt suggested three ways to meet the obligation:
1. A 2 mill increase in real property taxes. This would bring in about
$600000 per year.
2. A tax of 10 mills on personal property tax which would net about
$90,000 a year.
3. A 2% s ales tax, which would give the City an additional $300,000.
Burt said the sales tax is the fairest and most equitable as it covers all
persons whether living in the City or out of it. This method also provides a
steady income whereas the property taxes come in only about twice a year, making
it more difficult to apportion payments for our bills.
The Atty's opinion is that the City can borrow funds if they are repaid
within the next fiscal year, and if the amount borrowed does not exceed 75% of
the anticipated revenue of the fund doing the borrowing.
Council discussed the pros and cons of the various means of obtaining
increased revenues and finally settled on the proposition to tax personal prop-
erty as this would bring the taxes into equity. Building permits in the City
last year were 609 trailers which do not share the cost of City services as we
have not taxed personal property for several years. Taxation of personal prop-
erty would cover trailers, boats, planes, automotive vehicles and inventory, not
personal belongings. The personal property tax list is already fixed as the Boro
levies such a tax. Council will have a better idea of tax levy after the 1970-71
budget is presented.
Since the deficit was acquired over a period of years, it likely will
be paid off the same way. By close budgeting and careful borrowing this can be
accomplished. Council authorized the City Manager to negotiate with NBA and ASB
'- for the lowest interest rate possible on a loan of $145,000, plus or minus.
This loan will be against accounts receivable for fiscal 1970-71 as
bond monies cannot be used for this purpose. They must be spent for the purpose
they were voted on; i.e. construction of capital improvements.
Burt said money is getting harder and harder to borrow and the City
should plan several years ahead for improvements, by taxation, so we would not
have to pay the exhorbitant interest rates on bonds. With a 2% sales tax,
some money could be put aside every year for capital improvements. As it is now
the City can borrow one million dollars with bonding, but we pay back over two
million, thus paying twice the value of the improvement.
Council did not express itself on this suggestion, other than the Mayor's
saying this was the route to go, and that we could not plan on too much State
help, if any, as other Cities in Alaska, with less income potential, will be
asking for aid.
The budget next year will likely be larger than this yea
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Notes on Council Study Session 3/9/70 page two
Robbins said fie had received the breakdown on audit costs. Ourt's mem-
orandum recommended payment. Council agreed to pay, in increments, but thought
the auditors should have notified Council when they saw the costs were going to
exceed the estimate - especially to such a large extent. The estimate given to
Council by liedla & Sherwood on 6/3U/69 was between $4500 and $55U0 - the final
statement was $17*796.52, an increase of 300.23%.
The City is trying to follow through on the suggestions of the auditor.
Some of them will take more than one year to accomplish.
Inventories for KCL are ing set up. W&S inventories haven't been
started yet. Equipment inventory will be worked on also. Control over purchasing
is being studied. Fixed assets will take a lot of work.
Council also agreed the same auditing ffrm should be hired for the audit
Of fiscal 70-71. This will have to be acted on at a regular meeting. Burt said
they should be contacted soon as part of the work can be carried on prior to the
end of the year.
Robbins also said Susitna Supply offered its building to the City for
$1151,0009 but Jaynes said it is not suitable for City purposes, and it would take
too much money to remodel for our purposes. A local contractor estimated a bldg.
55' x 80' would cost the City about $80,000.
Meeting adjourned 9:20 p.m.
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