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Analysis: Ad off about borough budget under Hopkins

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Posted: Tuesday, September 25, 2012 11:50 pm | Updated: 11:31 am, Mon Jan 21, 2013.

FAIRBANKS — When the Borough Assembly set to work on its budget this year, animal lovers packed the assembly chambers and delivered a chain of collars, one for every dog euthanized at the shelter the previous year.

They pleaded with the assembly to reverse a cut it made to the animal shelter, and after hours of testimony and research, the assembly obliged. Even with the funding restored to the level introduced by the mayor, the animal shelter closed its doors to Monday adoptions.

That’s because the budget introduced by Mayor Luke Hopkins held the line on an increasingly expensive department, forcing department restructuring, and a key element of the mayor’s goal of maintaining the property tax rate.

The mill rate from that budget decreased from 11.294 to 11.216, or a savings to taxpayers of $7.80 per $100,000 of assessed value.

However, as Hopkins runs for re-election, his handling of the budget has become a central theme of his race.

Hopkins says he’s saved taxpayers millions, limited borough growth and stabilized the budget. His opponents say he has been responsible for continued growth, criticizing him for not reversing the growth trend in borough spending.

A conservative group called Friends of the Interior, which supports Hopkins’ main challenger, former Doyon Limited executive Norm Phillips, published an ad in the Sunday edition of the Fairbanks Daily News-Miner showing the budget’s growth under Hopkins’ leadership.

The graph shows three years of moderate spending increases from 2008 to 2011 — two from former Mayor Jim Whitaker and one of Hopkins’ budgets — ending at about $130 million. Then, during the fiscal year 2012 that ended in July, the budget spiked to $147 million. The ad predicted the fiscal year 2013 budget will be $155 million.

Was Hopkins responsible for boosting the borough budget by $17 million, a 13 percent increase?

A Fairbanks Daily News-Miner analysis of budgets dating back to 2001 shows the ad produced by the Friends of the Interior compared budget numbers from different stages in the proposing and spending process. When comparing numbers from matching points in the process, the budget still grows but at a slower rate than portrayed in the ad.

The numbers used in the ad are all correct but come from different stages. That’s because each borough budget contains four different price tags: one recommended by the mayor, one approved by the assembly, one that’s predicts what spending could be and one that reports what was spent.

Consider a household budget. When putting together a budget for the year, you’ll put in more money than you need in case heating bills or groceries are more expensive or if gas prices spike.

The borough does the same thing when the mayor and assembly work on their budgets, borough finance controller Debbie Brady said.

“It needs to be conservative,” she said. “They might not need all those contingencies for snow plowing for the oil heating, they might need the money for both of those, but maybe only one.”

Determining what the borough spent isn’t calculated until six months after the close of the budget. Unlike a household, the borough can’t easily check its bank account online; it requires auditors to produce what is called the “budget actual.”

To get a handle on what borough spending might be, the borough produces what is called a revised budget halfway through the financial year. The revised budget is a prediction of what will be spent and includes any additional spending approved by the assembly, which typically is funding through state or federal sources. It’s typically the most inflated budget, Brady said, because it includes received funding that might not be spent right away or money that is designated for savings. For example, the fiscal year 2012 budget puts at least $6 million into the borough’s savings.

In the Friends of the Interior’s comparison, the first three years of moderate growth were all based on budget actuals, the smallest number. The huge spike comes from the most recent year’s revised number, the largest potential number for the budgeting year.

That sort of comparison doesn’t tell the full picture, Bradley said.

“If you’re comparing across years, you should be comparing revised to revised, actuals to actuals, approved to approved,” she said.

So while the most recent year’s actual won’t be available until January, it will almost certainly be $6 million less, or even less, than the $147-million figure Friends of the Interior uses, Brady said.

Friends of the Interior Chairman Chuck Wiegers explained that the group used numbers provided by members of the assembly. He noted that the ad included an asterisk showing that this year’s spike is the most recently available number. He conceded that it’s not the final number comparable to previous years’ actual budgets.

“Obviously you can’t you have the actuals at this point,” he said. “It was the research I could do with the caveats that I could provide.”

Wiegers said he’s concerned about the size of the budget. By every measure — the recommended, approved, revised or actual — the budget has grown during the past decade.

Wiegers said he’d prefer to see the borough shrink, and he said Phillips is the guy for that job.

Hopkins, in an interview, said he has introduced budgets that contain the three smallest increases in more than a decade. His first two recommended budgets clocked in at 2.89 percent, and his most recent budget was 1.38 percent, for an average growth of 2.3 percent.

That’s compared to an average growth of about 4.6 percent growth under Whitaker’s recommended budgets.

Under both Hopkins budgets, the assembly has added between $400,000 to $700,000 to the approved budget and the assembly both increased and reduced the approved budget while Whitaker was in office.

The Borough Assembly still can amend a mayor’s budget before it approves it, and the budget can be further changed during the year. But any additional changes will typically come through state or federal spending because the property tax level is locked in when the budget is approved.

Hopkins said he was unfazed by the ad, calling it “clearly false.”

“I know the numbers.” Hopkins said. “What I’ve said and what I’ve done is that I’ve had the lowest percentage of growth in a decade. When I say stabilize the budget, you limit the amount of growth, and that’s what I’ve done.”

Hopkins questioned how Phllips would reduce the budget.

“You have to say ‘No we aren’t going to do the services, we’re going to have less employees,’” he said. “I’ve provided the services to the borough that the community wants and needs, whether it’s buses or recreational services or time at the pool.”

Phillips said he’ll have to wait until he’s elected and can sit down with the budget before identifying any places to cut.

“I’m going to look for ways to reduce government, and to sit here and say I’m going to eliminate this, this and this, that’s not the way I do business,” he said. “I’m going to sit down with the directors and we’ll be able to sit down with the line item budgets.”

Phillips said he would consider privatization of services.

Borough Assembly Presiding Officer Diane Hutchison, who works as a certified public accountant and hasn’t taken sides in the election, said much of the growth in the borough budget is because of obligations such as labor contracts, school funding and increased energy costs. She said decreasing spending and coming in with a budget that’s smaller than the previous year would be hard work.

“The only way I could think of to come in negative would to be cut a program. That’s the only way there would be to cut the budget,” she said. “You’d have to make a concerted effort to cut personnel, and that would be to cut services.”

The borough election will be held Tuesday. For more information about historical budget levels, visit the Politics Cache blog on

Contact staff writer Matt Buxton at 459-7544 or follow him on Twitter: @FDNMpolitics.

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