The Anchorage Assembly held the first public discussion on the municipality’s budget for 2017 on Tuesday night. The big question — how to fill the “$40 million hole” left by a large decrease in funding from the state, which is battling through its own budget deficit.

In the mayor’s proposed budget, a number of cuts have been made, but new revenue sources were also highlighted, including a marijuana sales tax.

Mayor Ethan Berkowitz is pushing for a $502,346,507 budget, an increase from this year’s approved budget of $481 million.

But how are we paying for it?

More than half of the budget will be funded with property taxes, which are expected to total more than $271 million. While revenue sharing with the state is expected to bring in $4.5 million, that’s less than half of what 2016’s budget got. However, the mayor’s forecasted increase of $7.8 million in other taxes may help overcome that loss.

The increased tax revenue includes an estimated $3 million from marijuana sales. The mayor said that will be a large leap from this year, as marijuana retailers will be selling taxable products all of next year versus just the last few months of this year, now that the first cannabis testing facility has opened.

That revenue will not be enough, however, if some cuts aren’t made.

The only department safe from budget cuts is the Anchorage Police Department, which was allocated funding to add 56 more officers by the end of next year to increase public safety. Berkowitz’ proposal did not allow for cost of living increases for officers, however.

There were some jobs cut, but many are or will be vacant, including several related to the SAP software project, slated to end next spring. Even with the cuts, the city’s employee numbers went up from 2,272 to 2,296. Some jobs were shuffled around to prevent loss — there were more than 50 additional full-time jobs over last year’s numbers, while part-time and seasonal positions were knocked down in almost equal measure.

To prevent further job loss, Berkowitz’ plan outlines non-labor personnel cuts — reducing firefighter overtime, canceling People Mover bus services on holidays and even cuts to snow plowing, a job shared with the Alaska Department of Transportation and Public Facilities.

About a dozen people showed up at the Anchorage Assembly meeting Tuesday night to give their input on the budget. About half of them were from the arts community and asked the Assembly to reject a 36 percent cut to the municipal arts commission grants.

The municipality usually awards $137,000 for community art programs, but Berkowitz’ proposed budget dropped that amount down by about $50,000.

“Every single one of you has said, ‘I support the arts,’ and that’s great to hear, I love hearing that, I love hearing that from people,” one man told the Assembly. “But when you tell me you support the arts and then cut our budget by 36 percent, what you’re doing is you’re paying me lip service. That’s great, if you’re backing it up. What I’m asking you to do is put your money where your mouth is.”

There were also multiple people there to speak on behalf of the Federation of Community Councils.

If you wanted to speak about the budget, there will be a second opportunity during a public hearing at the next regular Assembly meeting on Tuesday, Nov. 1. Read the full budget here.

KTVA 11’s Daniella Rivera and Shannon Riddle contributed to this report.