City manager outlines Dillingham’s budget strategy
The City of Dillingham budget is on track to end the financial year in the black. With two excise taxes on the docket and more financial planning to come, KDLG’s Izzy Ross sat down with City Manager Robert Mawson.
This interview has been lightly edited for clarity.
Izzy Ross: What is the situation with the City of Dillingham budget at the moment? Where is it?
Robert Mawson: Last year’s budget was a little upside down — there were more budgeted expenses than projected revenues. But last year there were a number of expenses that needed to be on the books because they started this year. So right now, if you look at our actual revenue versus expenses at the end of March, I think we were about $1.8 million in the black. We had received more money than we had spent. So while the budget passed in the red, our actual operating conditions are in the black because we’re not spending a dollar we don’t have.
There are a few things that take place towards the end of the year that usually have a big impact. We have bond installments and things like that that happen periodically. But overall, I think we’re pretty well seated to finish this exercise in the dark. And we’re working pretty hard right now to see what we can do to prepare for next year. There are investments we need to make — I think the community is aware of that.
Ross: What are some of the investments the town of Dillingham is going to make next year?
Mawson: We are currently working with our lobbyists – the city has hired Chris Hladick – he and I are working together to seek federal and state funding. We look at grants, we work with Senator Murkowski’s office, we work with the local legislature. We’re trying to see what we can do to fund projects that have really been on the books for years, like port projects. We would like to install a new float system there, we would like to improve the property around the harbor to make it more suitable for commercial investment or other fishing related activities. We have a number of projects that deal with erosion along the coastline, we have issues with our sewage lagoon, we have a lot of road issues, different things we’re trying to do and see what we can finance. We need heavy equipment, we need facility upgrades.
We may be spending money on design, grants, that kind of stuff so we can put those projects in the queue and hopefully get some of that funding back.
Ross: I would like to know what you think of this strategy. And if some of the taxes that flow from that have been discussed in recent meetings – the marijuana excise tax that just passed, and then also the fish tax that’s on the table – how do they fit into this strategy.
Mawson: You can only spend what you earn. And you can do everything you can to reduce your expenses, but sometimes expenses are really out of your control. Our expenses on fuel, parts, shipping – all of these things have grown over the years at a faster rate than our income.
We really need to improve our ability to collect on our current revenue system. So we currently have taxes in place that depend on collection activities. If we are not able to perform all the activities that we need to collect this tax, we do not get all the revenue that we could receive for this purpose. So we have to maximize our income. And we approach that by looking at our operational procedures, by looking at our workforce, our ability to do these things.
We may review service charges. The city operates several businesses, if you will: The landfill, the water system, the sewage system. These are businesses. Technically, a business is set up to be self-sufficient – it uses user fees to bring in enough money to cover its costs and set aside a bit for equipment replacement etc. The city has made a conscious decision in the past to subsidize these businesses as necessary to keep them in business, using tax money that can be used in this way. But again, this can only be sustained as long as you have the ability to do so. So we’re going to look at user fees in our businesses, not necessarily to make them 100% self-sustaining, but just to see if we’re doing it fairly and if we’re able to cover the majority of our costs.
We’re looking for grants — a lot of these projects we have are worth millions of dollars. So we have to look at those big ticket items that way.
And finally, you know, there are real needs that we have here in terms of equipment, facilities, staff salaries, things like that, that need to be adjusted. We will therefore seek additional income. And the two that landed on a table are the marijuana excise tax, which the council passed at the last council meeting. It’s hard to gauge what that would bring to the city at this point, because it’s hard to know what those numbers are. But by some estimates, it could net the city an additional $80,000 in taxes. And that’s not going to accomplish a big project at the port. But it may help set aside some of the landfill or water utility costs.
And then the fish tax. I’m not a fish tax expert, but as I understand there are many communities in Alaska that have a fish tax and Dillingham is not one of them. According to some estimates, the fish tax could bring the community several hundred thousand dollars in revenue. If so, well, that might accomplish a little more than the marijuana excise tax.
But there are a number of questions we need to explore with this. [Processors are] the purpose of the fish tax. It’s a tax on fish brought to processors in Dillingham. It’s not about the fish caught in the water, or where they are caught. It is not a sales tax. It’s an excise tax on the fish that goes to the processors. So we are in talks with some of the processors. We want to make sure this is approached more as a partnership.
Then we want to use that funding to make investments in the community. Maybe in port, maybe in housing, other things that could support this community and the processors as well. But there are a number of directions we could take with this. Looking at the excise tax amount adjustment, how it’s applied, where it’s applied—all of those things that we need to discuss a little more and look at. The board referred this item to the finance and budget committee, and we have started these conversations, and we will do a little more research on the real impact of this in the future.
Ross: Much of the debate when the town considered a tax on raw fish several years ago when it decided to annex the district was that other communities would necessarily benefit from a tax on fish in Dillingham . So it’s an interesting dynamic to think about this excise tax on processors.
Mawson: Yes, it is. And I think those are all things that need to be explored. Dillingham understands that we are somewhat of a regional hub, and we have a responsibility not only for the people here in Dillingham, but also for the people of the region. And I think that’s also part of this broader conversation that we need to have – where is this money going? Because that’s not necessarily what we’re talking about. We need to make some sort of commitment as to how we can help the region. And it’s hard to help the region when you don’t have the funding to do so.
So maybe some of that funding can be used to do things that are demonstrably good for the area, rather than just good for the community. And I think there’s a real need for us to think more regionally, to look at partnerships, to see what we can do to maybe leverage that funding to do even bigger things, if we can partner with federal agencies, state agencies, grant funds, other community organizations and say, “This is something we can use to improve what we have here.”
The big difference between an excise tax and a sales tax has to go to the voters, and the voters approve of the sales tax. If you ever need to make an adjustment, you have to go back to the voters. In the case of an excise tax, the board can actually pass that. And if you make adjustments along the way, because you see things aren’t working quite the way you’d like, the council can do that through council action. So you can react much faster to things that need to be done. And at that point, the board needs to be able to look at all aspects of that and come to a decision that they feel is best for the community and the region.
We are not there yet. We are working on it. And I welcome any input anyone may have to this and invite any conversation they would like to have with me. I’m available.
Ross: Thanks so much for sitting down and I hope we can continue this discussion in the future.
Mawson: Sure, anytime. Thank you.
Contact the author at [email protected] or 907-842-2200.