Assembly advances FY26 budget direction, amends staffing and raises school mill levy

KETCHIKAN, Alaska — The Ketchikan Gateway Borough Assembly on June 2 voted through several changes to the proposed fiscal year 2026 borough budget, approved adjustments to the property tax levies and scheduled a third public hearing on the full budget for June 16.

The assembly adopted an amendment to ordinance 2070 that eliminates a proposed software engineer position, reducing the general fund appropriation by $177,336. The assembly later voted to table and then postpone final adoption of the entire FY26 budget until its June 16 meeting to allow another public hearing and further review. Separately, the assembly approved changes to the tax levy resolution, increasing the area‑wide schools mill rate and reducing the non‑area library mill rate.

The software engineer position was removed after a motion by Assemblymember Thompson, who said the current staff member intended to remain employed, reducing the need for overlap. The amendment passed on roll call. A later proposal to remove a newly budgeted HR analyst position failed after debate about the department’s workload and the difficulty of administering personnel requirements with just two HR employees.

Why it matters: The budget debate focused on personnel costs, which several members identified as the primary driver of rising expenditures. Assembly members pushed staff for options to control labor costs without undermining critical services.

Most important facts: The assembly - Passed an amendment removing one software engineer position (general fund reduction $177,336). - Rejected an amendment to eliminate a new HR analyst position (proposal to reduce $128,250 failed). - Voted to postpone final adoption of ordinance 2070 and set a third public hearing for June 16, 2025. - Amended and passed Resolution 3,125 adjusting levies: increased the area‑wide schools mill rate from 4.75 to 5.00 mills and reduced the non‑area library mill levy from 0.70 to 0.50 mills; the full levy resolution passed 6–1. - Adopted the Major Projects and Capital Improvement Program (FY26–30). - Adopted a separate resolution excluding certain higher‑paid employees from FY26–28 cost‑of‑living adjustments; that resolution passed 4–3.

Discussion and context: Assemblymember Thompson framed personnel costs as the largest driver of the budget increases and proposed the software‑engineer cut as a modest savings step. Assistant Borough Manager Cynna Smith explained the software engineer was added anticipating a retirement that did not occur and that the HR position is needed to address HR workload. HR Manager Carolyn Ecklund told the assembly the HR office currently has two staff covering approximately 125 full‑time equivalent employees, including substantial transit compliance work.

Assemblymembers discussed other ways to shore up school funding, including potential use of transient‑occupancy tax revenue, PILT or one‑time transfers from general fund reserves. Several members urged caution about immediate tax increases and asked staff to return with additional options; others pressed that schools are the borough’s primary statutory responsibility and favored modest levy increases to avoid midyear shortfalls.

What’s next: The assembly left the budget motion on the table and will reconvene June 16 for a third public hearing and final vote. Staff said budget book updates and reconciliation will follow adoption and will be published as the final FY26 budget.

Ending: The assembly’s June 2 actions reshape the draft FY26 budget but leave final adoption pending a scheduled June 16 hearing and vote. The borough manager and staff will return with reconciled budget documents and additional analysis in advance of that meeting.