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Nome Determining Budget, If It Will Run At a Deficit, How to Spend CARES Act Funds

Nome City Council members review budget items. Photo: Matthew F. Smith, KNOM.

The City of Nome isn’t anticipating making drastic budget cuts for the upcoming fiscal year, FY’2021, but is instead opting to be conservative while still trying to balance unknown revenue projections. Due to coronavirus pandemic impacts most city departments are looking at some cuts but not lay-offs.

While the city budget is feeling the weight of an Iditarod, and spring tourist season, that was essentially cancelled, it hasn’t been devastated like other Alaska municipalities. At least, not yet.

Nome City Manager Glenn Steckman told the City Council in a recent work session that Nome lost about $56,000 in sales tax revenue for the month of March.

“Obviously, the hits included hotel occupancy. But ironically revenue is up for food stores and for shipping of products because a lot more people are shipping into the city.”

As the city creates their annual budget, they’re still identifying some unknown pieces, such as the full economic effects of COVID-19 on the rest of the fiscal year. Right now, the City Council is poised to deny a brand-new construction loader at $375,000, going to the Nome Public Works Department, and must now decide if they have the money to hire an investigator for the Nome Police Department. That investigator would work on the backlog of older sexual assault cases, something Chief Bob Estes advocated for during his administration.

Also, councilmembers are determining if they can give tax relief to the community at the expense of the city’s coffers. Last Monday night, they passed the first reading of an ordinance to reduce the summer seasonal sales tax from 7% to 5%. Steckman told the council how that might affect their budget.

“For June, July, and August that would be a reduction of $542,000. If we did a property tax reduction, one mill is worth $375,000.”

That amount Steckman cited is annual, or per year. The Nome City Council isn’t discussing any ordinances to lower the mill rate at this time. The FY’21 working budget holds the mill rate steady at 13 mills. And the city is already potentially looking at running a deficit.

Nome does have some potential financial relief on the way. The municipality expects to get $5.6 million dollars in CARES Act money but Nome, and other municipalities, remain uncertain on how they can spend these funds.

It cannot be used to re-coup lost revenue. But, the funds can be used to cover payroll for staff who worked to help municipal mitigation of COVID-19, including public safety, public health, and human resources. In Nome, Manager Steckman hopes they can cover the expenses of processing travel permits, and overtime for the Nome Police Department, who have seen a surge in calls since the pandemic began.

Councilmember Jerald Brown wondered if the city can use those funds to help local, small businesses who may be struggling at this time.

“Is there a possibility that we could use $4,000,000 or $5,000,000 of that money to distribute to entities that can prove that they were injured and have no other reimbursements?”

Those are questions that Steckman doesn’t have answers to yet, but he says municipalities are looking to the state and federal government for direction on that subject.

If the city cannot spend the CARES Act money on local businesses, Councilmember Mark Johnson says Nome has coronavirus related updates that need addressing like updating the tele-conferencing systems so that meetings can be held while following social distancing guidelines. Johnson also suggests upgrading the Rec Center, which is Nome’s emergency facility.

Steckman estimates that facility needs approximately $3-million in upgrades to become an appropriate emergency facility for the community. Those are upgrades that might be necessary if the coronavirus pandemic lasts for a second wave.

The council still has some time to get more answers to their questions. Another work session to discuss the FY’21 budget is scheduled for tonight at 5:30pm. The first reading of the budget is scheduled for the Nome City Council’s May 25th regular meeting.

The most recent draft budget reviewed by the council had a total of $13,473,954.23, about a million dollars less than the FY’20 amended budget of $14,515,373.43.

Image at top: Nome City Council members review budget items. Photo: Matthew F. Smith, KNOM.

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