A budget crisis by choice

Angela Rodell. (Mark Sabbatini / Juneau Independent)

By Angela Rodell

If you listened to the debate over Juneau's FY27 budget, you could be forgiven for thinking the city was on the verge of collapse.

Residents were warned about closing pools, shuttering recreation facilities, reducing social services, and making deep cuts to basic city functions. The message was clear: the voter-approved tax initiatives had created a fiscal emergency, and painful sacrifices were unavoidable.

Then the budget passed.

The pools are open. Treadwell Arena is open. The field house is open. Social service grants remain largely intact. The affordable housing fund remains intact. Most of the services residents were told might disappear survived the process.

That should be reassuring.

It should also raise an important question: if Juneau's finances are truly in crisis, why did so few of the threatened cuts actually occur?

The answer is not that Juneau lacks fiscal challenges. The voter-approved food and utility sales tax exemption and property tax mill rate cap created an estimated $10 million to $12 million annual gap that the city must address. That is real money and it requires real solutions.

But the final budget reveals something else. Juneau does not have a crisis of resources. It has a crisis of priorities and a governing culture that too often treats tax increases as the first solution rather than the last.

To her credit, City Manager Katie Koester delivered exactly what the Assembly requested. Her proposed budget included $4.6 million in savings through tighter budget assumptions and another $2.5 million in user fee revenue. That was disciplined and serious work.

The Assembly then approved several revenue measures, including closing tax exemptions and raising the single-item sales tax cap from $15,000 to $50,000. It also approved a handful of actual cuts. Mount Jumbo Gym will close. The Juneau-Douglas City Museum will lose two staff positions and much of its programming. Funding for Travel Juneau, the Juneau Economic Development Council and other partner organizations was reduced.

Those are real impacts. But they stand in stark contrast to the months of warnings about widespread service reductions and municipal hardship. The final outcome simply did not match the rhetoric.

What concerns me most is that while Assembly members repeatedly described Juneau's finances as fragile, they simultaneously approved decisions that made them more fragile.

On May 19, the Assembly voted 8-1 to terminate the Eaglecrest gondola agreement and pay Goldbelt $12.2 million, including $9.5 million directly from the general fund. City staff confirmed that payment will largely deplete the unrestricted fund balance heading into FY27.

The Assembly then approved nearly $1.7 million in general fund support for Eaglecrest next year, almost double the subsidy provided in FY26.

The Michael J. Burns Building tells a similar story. The Assembly approved the purchase of two floors for $10.2 million. Renovation costs have already grown from roughly $7.5 million to approximately $13 million, requiring millions in additional funding from other projects and the general fund.

Reasonable people can disagree about the merits of these decisions. What is harder to defend is portraying Juneau as one bad quarter away from disaster after voluntarily spending down reserves at this scale.

At the same time, our own Community Compass survey identified affordability as residents' top priority. Yet the response to nearly every budget challenge continues to be some variation of higher taxes, higher fees, or both.

That mindset is also driving the conversation around a proposed 1% seasonal sales tax for recreation. Residents gathered signatures because pools, the field house and Treadwell Arena appeared on lists of potential cuts. They acted in good faith.

But the Assembly ultimately preserved those facilities without the tax.

If the initiative reaches the ballot, voters should understand they are no longer deciding whether to save recreation. They will be deciding whether to create a new seasonal tax dedicated to recreation funding even after those facilities have been protected.

Most importantly, there is an entire side of this conversation that continues to be overlooked: growth.

The debate has become almost entirely about how to divide a pie that is supposedly shrinking. Far less attention has been paid to the fact that the pie is about to get larger.

Aak'w Landing is expected to come online in 2027 and 2028. When it does, it will become one of the largest property taxpayers in the borough while generating substantial additional sales tax activity. That new revenue will not solve every challenge, but it changes the conversation considerably.

The fiscal gap facing Juneau is not a permanent condition. It is a bridge.

A community that believes its only options are cuts, reserve draws, and higher taxes eventually starts making decisions from fear. Juneau should be planning for growth. We should be asking how to expand the tax base, encourage investment, support employers, and position ourselves for long-term success.

Residents should be reassured. Juneau is not facing municipal collapse. The budget that was ultimately adopted proves that.

But residents should also expect a more optimistic conversation from their leaders. The future of this community cannot be built on annual declarations of fiscal emergency. It must be built on disciplined spending, responsible growth and confidence in Juneau's ability to expand its tax base rather than continually increase the burden on those already paying the bills.

• 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.