The City of Nome is spending more money than it makes, so it's weighing ways to increase revenues to balance its budget for the 2026 fiscal year. Here's a breakdown of four options being put on the table.
Transcript
The City of Nome is spending more money than it makes. That simple equation, revenues minus expenses, is what's on the mind of city administration and the Nome Common Council as it reviews its options for the budget for the upcoming fiscal year.
Now we've reported on a few different ways the city proposes to balance its budget. In other words, how to make revenues equal to expenses. The first was an idea put forward about a month ago to reduce the City of Nome's contribution to Nome Public Schools by about $2 million.
Now, frankly, that was never going to happen. It was a bit of an inflammatory move, just to get people talking about the conversation that something needed to change for the budget next year. In that draft budget other departments saw significant cuts too.
Now that we're a few weeks away from the budget being finalized, we're taking a look at a few ways for the city to increase revenue - so the other side of that equation - to try to balance the budget. At Tuesday night's meeting the council is going to review four different options.
The first is just going to be to keep things the way that they are. Option B looks at increasing the mill rate. Now, the mill rate is what's used to calculate property taxes for property owners, with one mill being equivalent to $1 for every $1,000 a house's assessed value is. So for example, if your home's assessed value is $300,000 and the mill rate is 11.5 like it is now, then your annual property tax bill is $3,450.
Okay, so with that quick mill rate lesson out of the way, option B looks at increasing the mill rate to 13, so up from 11.5. Using that same example of a $300,000 house, your new tax bill at a mill rate of 13 would be 3,900 bucks, up from $3,450.
Not everybody in Nome are property owners, so another option being put on the table is looking at increasing the sales tax. Right now the sales tax rate is 5% and an increase to 6% is being put on the table. What that would look like for you is if you walked into Hansen's and bought a gallon of milk for five bucks, before you were paying 25 cents in sales tax on that gallon of milk. Afterwards, you would be looking at 30 cents in tax on that $5 purchase.
Options C and D, in this case, are looking at keeping the mill rate the same with a 6% sales tax, or a mill rate of 13 with a 6% sales tax.
So now that we've laid out these four options, what is that actually going to do in terms of balancing the budget?
Option A, keeping things the way they are right now, would see a deficit of just over $2 million.
Option B, which raises the mill rate to 13, is just a hair over $1.3 million in funding through appropriations.
Option C, which keeps the mill rate the same, but has that 6% sales tax decreases the deficit to just over $1.2 million.
And then finally, Option D, increasing the mill rate and increasing the sales tax brings our deficit down to 500,000 bucks.
Now I said there's four options. There's technically a fifth one on the table, although it's not being considered seriously at this point. It was just a thought exercise requested by council member Scott Henderson. He asked, what happens if we did a 10% slash across the board to every department that the City of Nome currently funds, and the city asked department heads to say, 'Okay, if we did that, what would that look like for you?' And we have some answers now.
The city's contribution to Nome Public Schools would look at dropping to about $3 million, that's about $400,000 less than last year.
The Nome Police Department would cut four positions and reduce overtime pay.
Animal Control would potentially take a cut, and some line items suggest the city may even consider closing Old St Joe's and the Mini Convention Center just to cut expenses.
The council will be reviewing these options at Tuesday night's Common Council work session and regular meeting that follows. There are opportunities for citizens comments at that one as well as the second reading of the budget on June 9. If you'd like to say anything about the budget process, here's your chance.
