Ketchikan Gateway Borough approves $2.4 million appropriation for Point Higgins diesel spill cleanup

The Ketchikan Gateway Borough Assembly on Oct. 6 approved Ordinance 20-88, appropriating $2,400,000 from general-fund reserves to pay immediate cleanup and long-term mitigation costs tied to a diesel spill at Point Higgins Elementary School.

Finance Director Charlene Thomas told the assembly the borough manager made the written findings required by borough code to declare the incident an emergency and that the appropriation will allow remediation to proceed without delay. "This ordinance will provide appropriation authority to ensure remediation proceeds without delay," Thomas said.

Why it matters: Borough staff said the borough is advancing cleanup costs from reserves to maintain public safety and environmental protection and will pursue reimbursement from insurance carriers and, if necessary, from contractors involved. The assembly approved the ordinance by roll call.

Officials said two insurers are evaluating coverage. In response to questions from Assembly Member Thompson, the borough attorney said, "I expect a coverage determination from Iron Shore... and for the other carrier, Scottsdale, they expect to make a determination by the end of next week," and added, "I think we'll go into pay status in the next few weeks, honestly." The attorney also warned insurers often contest claims, and the borough may pursue recovery from the contractors if carriers deny or only partially pay claims.

Finance staff said the borough is using general-fund reserves now and will submit invoices to insurers for reimbursement; the finance director told the assembly the appropriation will leave about $100,000 in unreserved general-fund balance. Borough management clarified the borough maintains a separate reserved balance equal to roughly 30% of expenditures and said they expect reserves to be replenished as reimbursement arrives.

Assembly debate and vote: The motion to adopt Ordinance 20-88 was moved by Assembly Member Bailey and seconded by Assembly Member Palmer. Members raised concerns about drawing down the unreserved balance and asked how insurance and contractor recovery would be pursued. The assembly voted to approve the appropriation; the clerk recorded seven affirmative votes and the ordinance passed.

What happens next: Borough staff will proceed with remediation, continue coordination with the Alaska Department of Environmental Conservation, and submit costs to the borough's and the contractor's insurers. The borough attorney said staff is documenting work and costs so the borough can justify reimbursement requests.

Clarifying details from the meeting: The appropriation amount is $2,400,000; finance staff said the borough will have approximately $100,000 in unreserved general-fund balance after the appropriation; the borough maintains an additional reserved balance (about 30% of expenditures) that staff said totals several million dollars and will be replenished pending insurance reimbursements.

Assembly members requested follow-up on insurer determinations and potential premium impacts; the attorney said it was too early to tell whether the borough's insurance premiums will be affected.

Ending: The assembly moved quickly to fund cleanup to maintain public safety and environmental protections while pursuing reimbursement; officials said they will return with updates as insurer decisions and contractor recoveries proceed.