A balanced budget and a balanced perspective: What Juneau’s ‘deficit’ panic reveals

Angela Rodell, a former CEO of the Alaska Permanent Fund Corp. and commissioner of the Alaska Department of Revenue, served as treasurer of the Affordable Juneau Coalition during Juneau’s recent municipal election. (Mark Sabbatini / Juneau Independent)

By Angela Rodell

When the Affordable Juneau Coalition collected signatures earlier this year to place two affordability measures on the ballot, it triggered an outsized reaction inside City Hall. The goal of the petition drive was straightforward: let voters decide whether Juneau should reduce the cost of living and allow residents to keep more of what they earn.

Instead of using the moment to foster a clear, fact-driven conversation about spending priorities, the Assembly responded with alarm. Officials warned of impending shortfalls, promoted worst-case scenarios, and rushed to float a new seasonal sales tax to fill what they described as an “inevitable” $10 million to $12 million deficit. In the weeks before the Oct. 7 election, residents were told that failure to adopt this tax would lead to deep cuts and fiscal turmoil. What went largely unacknowledged was that the deficit was only a projection — one constructed on top of already padded budget assumptions.

Then came the election results. Juneau voters decisively approved the tax-cutting measures and rejected the seasonal sales tax. They signaled confidence that the city could live within its means and skepticism toward the fear-based messaging. And just weeks later, at the Nov. 5 Assembly Finance Committee meeting, the rhetoric shifted. The same officials who had warned of imminent crisis now acknowledged that the city could navigate the current fiscal year without drastic measures.

What changed? Not the numbers. The narrative did.

Here are the facts. The City and Borough of Juneau (CBJ) currently maintains $16.5 million in restricted reserves and another $20.4 million in other reserve funds — more than $36 million in total. These funds exist for precisely this purpose: to give the city flexibility during periods of economic uncertainty. Moreover, state law requires Juneau to adopt a balanced budget every year, ensuring that expenditures cannot exceed revenues.

Several years ago, CBJ also adopted a reserve policy requiring roughly two months of revenue to be held in a restricted account. The intent was to encourage more accurate budgeting — recognizing that reserves act as the true buffer for volatility, eliminating the need to layer “just in case” padding throughout the budget.

This becomes especially apparent when examining the city’s largest expense: personnel. With more than 500 general government positions, vacancies are a normal operational reality. Yet the budget assumes a fully staffed workforce every day of the year. As a result, the city routinely appropriates more for salaries than it actually spends. The Finance Committee recently learned that nearly $4.9 million in personnel dollars went unused in FY25 alone — effectively built-in savings that were never factored into the deficit narrative.

Adopting a more evidence-based approach — one that incorporates predictable vacancy savings — would have meaningful impacts on taxpayers. If the Assembly had acknowledged even $1 million of these unspent funds, for example, the FY26 property tax mill rate could have been set at 10.08 instead of 10.24 (ironically the same mill rate that will now be imposed by the ballot measure). And that still leaves roughly $3.8 million in unused personnel budget savings that roll into our current fiscal year. For residents facing higher housing costs and higher utility costs, those fractions of a mill matter.

So what should taxpayers take from all this?

First, the dire warnings were overstated. The $10-plus million “deficit” was a projection built on inflated expenditure assumptions, not a reflection of an actual structural imbalance. When the expenditure base is recalibrated to match real spending patterns, the projected gap shrinks dramatically. The looming deficit doesn’t disappear entirely, but it stops ballooning year after year — because the original projections weren’t grounded in how the city actually spends money.

Second, Juneau can discuss affordability without resorting to false dilemmas. The city is not forced to choose between maintaining reserves and providing tax relief. With more than $36 million in reserves and a mandatory balanced budget, there is room to tighten practices, sharpen assumptions, and still provide reliable municipal services.

And third, transparency matters. When estimates are presented as certainties or budgets are padded to create artificial pressure points, public trust erodes. Voters didn’t reject the seasonal sales tax because they oppose responsible governance — they rejected it because they recognized that City Hall has been budgeting on autopilot.

Juneau’s finances are not in crisis. They require discipline, clarity, and a renewed commitment to honest fiscal stewardship. The path forward isn’t to raise taxes — it’s to right-size spending and rebuild confidence in the numbers that guide our decisions.

In short: let’s replace panic with prudence.

• Angela Rodell is a former CEO of the Alaska Permanent Fund Corp. and commissioner of the Alaska Department of Revenue who is currently a business consultant and member of Juneau International Airport’s board of directors. Her column appears the second Tuesday of every month.