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With an anticipated $1 million loss in sales tax revenue, Soldotna approved a nearly $8.3 million operating budget Wednesday, more than $1 million less than projected for the previous fiscal year.

Due in large part to the cut in spending, the city also approved a property tax levy of 1.65 mills, unchanged from the prior year.

Soldotna expects reduced sales tax revenue following the imminent opening of the Wal-Mart store in Kenai. City Manager Larry Semmens said he was expecting the store to open sometime in the second quarter of the fiscal year, but now has learned it may not open until the end of the third quarter, some time in March.

Sales tax revenue also will be impacted by gasoline prices, which are considerably lower than one year ago.

On Wednesday, the Soldotna City Council approved the General Fund budget of $8,280,934, down from last year's $9.3 million General Fund budget. Anticipated revenues are $8,319,258 compared with a projected $9,455,250 for fiscal year 2009, which ends June 30.

The lone resident addressing the council during a public hearing on the budget, Fred Sturman said, "I think you guys really oughta consider cuttin' back. Hutchings and a couple other businesses are going out and all employees get a raise."

The approved budget calls for salaries of city employees to increase by 3.09 percent. Projected savings in health insurance and other benefit costs, however, result in lowering the overall salary and benefit line in the budget by 5.39 percent.

Saying he only spent two hours looking over the budget, Sturman said, "I looked at the most expensive thing we have in the city, and the worst maintained -- blacktop.

"Binkley (Street) is in terrible shape," he said.

Later in the meeting, when the council considered applying for federal economic stimulus plan funding for the city sewer lift station upgrade project, Sturman said, "This is exactly the kind of money I'm talking about.

"You're putting your kids and grandkids in debt over $50,000," he said, referring to the amount some critics of the American Recovery and Reinvestment Act of 2009 have projected industry bailouts will cost the future generation of taxpayers.

In a letter to the mayor and council members, Semmens said sales tax revenue is no longer split between capital and operations in this budget.

"All sales tax is recorded in the General Fund and no transfer is made to the sales tax fund," he said.

"The General Fund budget last year, if compiled in the same way as the fiscal year 2010 budget, was $9,261,675, including the transfers from the sales tax fund. Last year's budget required a $189,000 draw on fund balance," Semmens said.

The fiscal year 2010 budget is $8,280,934, which is down $980,741 from the prior year, but will contribute about $39,000 to the fund balance.

"Significantly, the operating budget is down slightly from the prior year even though there is a 3.5 percent wage increase and maintenance costs are up due to the change in policy regarding use of sales tax funds," he said.

Prior to the unanimous vote to approve the budget, Mayor Peter Micciche said, "We are in very good shape."

Phil Hermanek can be reached at phillip.hermanek@peninsulaclarion.com.