Skagway Assembly debates FY26 capital budget and whether to spend cruise-passenger funds or sales tax reserves

Skagway Municipality’s assembly spent much of its Oct. 23 meeting weighing tradeoffs in the proposed FY26 capital-improvement program, with members pressing the manager to prioritize school bathroom and ventilation upgrades, shore- and port-related safety work, and urgent erosion control on West Creek.

Manager Deach led off the session with a broad CIP summary, saying the school restroom and access upgrades will complete design this year and be phased over two years to spread costs. “You will see in the budget for ’26 is the critical restrooms, getting those constructed first and then moving on to the doors, access control, and the remaining restrooms,” Deach said. She told the assembly she expects roughly $1.2 million from sales tax in the draft budget for those initial efforts and has budgeted about $620,000 to design school ventilation upgrades.

The manager also described a series of port-funded projects separate from the sales-tax and CPV (cruise passenger) funds, including rockslide mitigation where a federal grant supports design and the municipality intends to budget about $326,500 in port matching funds. Deach warned that larger construction costs remain estimates and that shore-power assessment work and contractor-managed CMGC construction are moving forward under port funding.

Assembly members repeatedly flagged the West Creek levee as a health-and-safety priority. “That one particularly seems critical,” said an assembly member urging the levee’s return to the FY26 list, citing erosion that “looks like one weather event away from some catastrophic flooding.” Manager Deach estimated the levee project at about $1 million and said grant timing and federal availability could make rapid funding difficult.

Members debated major-ticket items and how to allocate two different revenue pools. Deach reported sales-tax reserves near $17.8 million and described CPV reserves of roughly $5.7 million. She ran scenarios showing how applying CPV to capital projects at historical percentages (up to 68% for some departments) versus moving more costs to sales tax would affect FY26 balances and projected deficits. “It’s possible that it would be in our favor not to apply CPV to projects,” Deach said, adding she planned to refine the spreadsheet before the first reading.

The sketched choices include relying on grants (Deach said a rural assistance application sought $2.5 million for Main Street design) and exploring DEC low-interest loans for eligible water/clean-water projects. Members noted the wastewater treatment-plant upgrade carries a $10.2 million grant and a local matching obligation that will require substantial local matching funds next year.

Superintendent Josh Coughran described the school’s request as “purely a maintenance of effort piece of budget here,” explaining the ask funds both the state-set maximum local contribution and separate community service programs such as extracurricular activities and a food-service partnership that benefits seniors. Coughran said recent state changes raised the base student allocation by about $680 but that full inflationary catch-up would still leave a gap.

On CPV strategy, some assembly members argued for spending CPV on passenger-related projects—consistent with the fund’s purpose—while others urged conserving CPV to avoid depleting reserves that may be needed in future cycles. Several members emphasized the need to balance near-term projects against long-term reserve health and noted that using sales tax for some work preserves CPV for port/passenger investments.

Manager Deach asked for direction and said the first public reading of the budget is scheduled for Nov. 5. There were no formal budget votes at the meeting; the assembly did adopt a procedural motion to adjourn (motion by Hillis; second by Waddell), with a roll call recording six yes votes.

Next steps: Deach will return to the assembly with refined numbers and scenarios ahead of the Nov. 5 budget first reading, and several members said they want the West Creek levee reconsidered for inclusion given its erosion risk.