Wrangell Sentinel -

Community members were given a first peek at the budget being proposed for the next fiscal year, in the first of several planned workshops held on Monday.

“This is a draft budget. It's certainly the starting point,” Borough Manager Jeff Jabusch pointed out.

“The budget here is balanced up to this point,” finance director Lee Burgess summarized, presenting the draft.

While the budget draft presented Monday is currently balanced, Burgess pointed out there are still several looming concerns. Rent revenues from the state for use of the local jail remain down from FY2015 levels by 45 percent. And in addition to a dearth of capital grant monies available through the Legislature, state revenue sharing will be down by 37 percent next year over the present rate.

Largest of the worries is the cost of the city's group health insurance plan, rates of which are set to rise by 38 percent this coming year. Taken together, the insurance, jail revenues and declining state contributions amount to around $800,000 in costs to the city.

The jump in insurance costs in itself would leap from just over $892,000 this current year to $1,235,855 the next, with no change in benefits. Burgess pointed out several unusually large claims filed this year directly contributed to the jump, but pointed out the rise is part of a wider trend.

Even with deductibles being raised from a low of $100 in 2003 to the present $3,000 by 2013, premium costs have been steadily increasing over the past 17 years, except for a brief respite in 2011 and 2012, and another slight drop this past year.

“It's become a real problem,” Burgess said.

Compared to the Consumer Price Index for Anchorage – considered the state benchmark – the city's insurance costs have stayed well above inflation, while revenue sources have stagnated and begun to decline.

“It's just uncontrollable,” Jabusch said of the rates.

Throwing around some alternatives, several plan options have been ruled out as untenable for Wrangell, such as providers Aetna and Moda. The latter company announced its intentions to pull out from the Alaska individual market altogether by the end of the year.

After speaking with a consultant, Burgess pointed out two other plans offered through Premera Blue Cross Blue Shield would offer slightly lower premium costs to the city. The flipside would be higher deductibles for employees, as well as an overall decrease in benefits. Even so, the alternative plans would still cost 25 or 29 percent more than this year's plan.

Another option would be for the city to discontinue employer-provided insurance entirely, compensating for this by raising salaries across the board. The city would also have to pay an annual fine to the Internal Revenue Service, at a rate of five percent its current health insurance expense.

Problems with this “dumping” solution include the possibility that some employees may not be able to qualify for plan subsidies through the individual market, and so could not afford plans themselves.

“It's not a fully-flushed idea and it's not being proposed,” Burgess explained. “It's viability depends on most employees being able to qualify for the subsidies.”

Sitting in on the workshop, Assembly member Daniel Blake expressed discomfort with the idea. “I would hate to see anybody that works for us not to have insurance,” he said. Blake added he would not vote for such a course under those circumstances.

Assembly member Mark Mitchell was more amenable to the idea, saying “I think self-insurance is going to be one of the things we need to look into.”

Despite the increasing cost of insurance, the budget presented on Monday was a balanced one. Means taken to offset these costs and balance the budget include the reduction by attrition of several positions and savings from departmental turnover. One example of this was the merging of the museum and Nolan Center director positions. Other savings have been found by reducing the number of capital projects being pursued, and Burgess said the draft proposes eliminating one of the city's two annual tax-free days.

Of the $3.2 million in capital projects being proposed by city departments, Jabusch said they could afford to fund about $1,085,940 of them. This would include substation replacement, sewer and water system improvements, modernizations for the Public Safety Building, and new accounting software. Funding sources for various other projects could be sought from federal and private sources, he said.

Beyond that, the proposed budget would maintain the same level of public services within the same mill rate of 12.75. Other than a previously scheduled increase in garbage rates by three percent, no other utility rate increases have been proposed.

The Harbor Department budget does take into account rate increases recommended by the Port Commission at its May 5 meeting; the increases being proposed have yet to be implemented, and await the Borough Assembly's review at its May 24 meeting. After playing with the idea of raising user rates for the past couple years, the commission agreed to a 10-percent increase to outside and inside dock face moorage, storage, port development fees and most Marine Service Center fees. These would also have a built-in mechanism to account for inflation, set at two percent per year.

Transient moorage rates have been rescheduled, shifting from flat per-foot rates to a sliding scale based around 0-30, 31-55, 56-100 and 101-up feet ranges, with the per-foot rate increasing as the vessel gets larger. Reserved moorage rates have also been restructured, based around three ranges of 0-30, 31-55 and 56-plus feet.

As an example, a 50-foot vessel looking for reserved moorage would cost $33 per foot, or $1,650 per year, rather than the current flat rate of $25 per foot, which has been in effect since July 2012.

In past meetings harbormaster Greg Meissner has explained the rise in revenue would enable his department to set aside more funds for deferred maintenance and other capital projects. He has pointed out the majority of rates and fees charged by Wrangell's harbors have remained unchanged for the past eight years, and regionally range from average to low comparatively speaking.

Jabusch said he would be keeping abreast of potential funding level changes as the Legislature approaches adoption of a state budget, but Wrangell's current draft is based on the most current information.

“We'll probably have at least a couple more of these before we finally adopt a budget,” he said.

In the meantime, members of the public are encouraged to look over the current draft, as well as to put forward any concerns, comments or ideas they may have regarding its details. A copy is available online at the http://www.wrangell.com home page for review.