How is the Budget Created?
The Budget Process
The Mayor is required to submit the proposed operating and capital budgets to the Assembly 90 days prior to the end of the fiscal year (October 2nd). Thirty days earlier (September 2nd), the Mayor is required to provide to the Assembly preliminary operating budget information on projected revenues, preliminary Tax Cap calculation, major reorganizations, and preliminary capital budgets. Preliminary strategic and business plans for the Municipality’s two utilities (ML&P and AWWU) and enterprise activities (Merrill Field, Anchorage Port, and Solid Waste Services) are also submitted.
Developing the Budget
Development of the budget starts much earlier in order to meet these deadlines. Preparation of the budget starts in the summer with a preliminary planning phase. The Office of Management and Budget (OMB) works with departments to review current programs and potential changes in spending and revenue in the next fiscal year. Some considerations during this process are:
- Contractually obligated increases, such as labor contracts, medical benefits, and leases;
- New responsibilities or programs required by Federal, State or local laws;
- Changes to programs to better meet community needs or interests;
- Programs that can be eliminated because they are ineffective, no longer required or desired; and/or
- Identification of and savings that can be achieved through efficiencies as a result of transforming the business of government.
In late summer the Mayor reviews the compiled information and estimated revenues. If it appears that a Continuation Level budget exceeds expected revenue, the Mayor may ask departments to develop options for reductions or additional revenue. The Mayor then reviews the options, evaluates the impact on services and citizens’ pocketbooks, and ultimately finds a balance between the two. This balance is reflected in the budget submitted to the Assembly by the Mayor, which is known as the “Proposed Budget”.
Assembly’s Budget Process
The budget is formally introduced at the Assembly’s first meeting in October. The Assembly is required to hold at least two public hearings on the proposed budget, which are scheduled during October and November. Citizens have three minutes to testify at the public hearing.
The Assembly also holds work sessions at which the Administration provides additional information about its proposed budget. Work sessions are less formal than Assembly meetings and provide a way for a back and forth discussion between Assembly members and the Administration and departments. Work sessions are open to the public but there isn’t a customary process by which public comments are taken.
As a result of citizen comments at the public hearings and information gathered at work sessions, Assembly members propose amendments to change the proposed budget. The amendment process takes place at an Assembly meeting in late November/early December. A majority (six) of the Assembly members are required to approve any amendment.
The Anchorage Charter requires that the Assembly approve the budget 21 days prior to the end of the year (December 10). If for some reason the budget isn’t approved by that date, the Charter also allows the Assembly and Mayor to continue its work. Once approved, that budget is known as the “Approved Budget”.
Mayor’s Veto Authority
As part of the checks-and-balances in the legislative process, the Mayor has the ability to reduce an amount in the operating budget. The Mayor has seven days following Assembly action to veto an item. In return, the Assembly has 21 days from a veto to override the Mayor's action. A super-majority of eight Assembly members is required to override a veto.
Round 2: First Quarter Amendments
On January 1 the Municipality starts a new fiscal year based on the budget approved in December. The budget process still continues as revenue information is updated and spending further scrutinized.
Based on this fine-tuning, in late March/early April the Mayor submits a revised budget to the Assembly. Unlike the proposed budget process in the fall that requires two public hearings, the Assembly only is required to hold one public hearing on the revisions (but may chose to hold more). The Assembly also holds work sessions to gather additional information about the proposed changes.
After Assembly action, the same veto and override options are available. This final budget, referred to as the “Revised Budget,” is the basis for setting property taxes.