Bethel's Preliminary FY19 Budget Was Passed, But Where Does That Leave Future Revenue?

Jun 29, 2018

The City of Bethel’s preliminary budget for fiscal year 2019 was passed on June 14, but one thing is clear: tough times are ahead for the City’s revenue sources, especially now that no alcohol sales tax is being collected.
Credit Christine Trudeau / KYUK


Tough times are ahead for the City of Bethel’s revenue sources, especially now that no alcohol sales tax is being collected. KYUK’s Municipal Reporter Christine Trudeau sat down with City Manager Peter Williams last week, along with Jim Chevigny, who was the city's Finance Director; Chevigny has since resigned.









Bethel’s preliminary budget for fiscal year 2019 was passed earlier this month on June 14.  


“The challenges this year… always balancing the general fund,” said former Finance Director Jim Chevigny. Chevigny, who started working for the city back in February of 2017, left his position on Tuesday. Chevigny and Williams initially presented the budget proposal to Bethel City Council on April 1; it then had to be revised.


“And then of course the biggest challenge was the lack of alcohol sales tax,” Chevigny said.


The state Alcoholic Beverage Control Board decided not to renew the license for Bethel’s one functioning liquor store. That meant that the city's anticipated revenue had to be dropped by $500,000, according to Chevigny. The council had to remove some major items from the general fund budget.  


“The police tower is about $320,000,” said Chevigny.


“One of the road projects was eliminated,” added Williams, referring to a project that cost around $160,000.


“And the rest are kind of reallocated money, property maintenance, so it was kind of a paper shuffle, but that balanced it out,” said Williams.


The reduction also leaves the streets and roads budget short, Williams said, with only a little over $400,000 budgeted for repairs in 2019, which isn't much compared to past years. The Community Action Grant Fund also took a big hit.


“So the Community Action Grant went from $168,000 down to about, I think, $15,000,” said Chevigny.


“The good news is, is that there was some money left up to the point alcohol quit being sold,” Williams said. “So there was some money there that already got rolled over.”


But that money ended up not rolling over on Tuesday when the council decided to hold off on approving the transfer. The start of the last fiscal year saw Bethel with a surplus, according to Williams.


“The budget was balanced and there was about $38,000 that hadn’t been designated for anything, so that’s how we started the budget off,” said Williams.


General fund revenue was approximately $10,000,000. For the next fiscal year, the projected revenue is down. Chevigny said that sales tax overall will likely not rise.

“Most likely if there are decreases or we’re flat, it’s a result of the internet sales,” Chevigny said.


Right now cities can't capture any sales tax on internet sales, but there is a court decision that could change that. In addition to the revenue loss from the alcohol sales tax, Chevgny says the city also no longer taxes the local power utility. AVEC is a non-profit, so that revenue source went off the books in 2014.

“That was about a $900,000 decrease immediately for that year. And then, of course, all years forward,” said Chevigny.


He estimates that and the sales tax shortfall will amount to about a $1.5 million hole.


“That’s just gone and the city can’t just say, 'well we can just cut that out of the budget,' because, you know, there isn’t that much fluff in the budget,” Chevigny said.


City Manager Williams says that the general fund is all that there will be for running the city.


“So the sales tax pays for fire department, police department, property maintenance, that’s a big one,” said Williams. “That means all the infrastructure that the city has.”


Including streets and roads. Williams adds that a lot of that infrastructure has problems.


“We got a shed over here called the bus barn, it’s falling off its foundation, literally; the roof here at City Hall,” said Williams, “and the Public Works building, it’s in pretty poor shape.”


Williams says that the time has come for Bethel to have a capital improvement plan. He's going to propose it to the council.


“The funds for that would mean that the funds for those projects would come from our cash reserve in the bank, and that’s just never been done here,” said Williams.  


Williams says that the reserve has been accumulating over the years. A big source has been unfilled city jobs.


“I think the question with what’s left in the bank is ‘how much do you leave in the bank and feel comfortable if, let’s say, there is an emergency?’ The important thing about using these funds is that if you put it off, and put it off, and wait for the roof to fall in on you then you, you’re gonna probably pay double,” said Williams. 


Bethel's capital improvement needs are likely to become a topic for the city council some time this summer. Williams said that a vote might come by early August.