Trends 2016: Kenai’s sales growing after 2009 decline, lead by retail

Trends in Kenai’s gross sales and property taxes recorded by the Kenai Peninsula Economic Development District (KPEDD) show that since 2008 the city of Kenai has been moving toward a trade-centered economy.

According to KPEDD’s 2015 Situations and Prospects report, Kenai’s property tax revenue has nearly tripled over the past decade (between 2004 and 2014) while its mill rate — the amount from each dollar of property value taken in taxes, measured in 1000ths of a dollar — has shrunk. Kenai took in approximately $1.9 million in property taxes in 2004; in 2014 that number was $3.3 million.

In that same time period, Kenai’s mill rate has fallen from 12.10 in 2004 to the current 8.86, which consists of a city mill rate of 4.35, a borough mill rate of 4.50, and a charge of .01 to support the Central Peninsula Hospital, according to the Kenia Peninsula Borough’s Finance Department website. The city’s portion of the mill rate has risen slightly in recent years, however — in 2014 the Kenai City Council increased it to its present value from 3.85 in order to support the rising cost of city employee health care.

A portion of Kenai’s property tax growth came from a rise in property taxes from oil and gas companies since 2004. According to the Situations and Prospects report, the property tax paid by these companies has increased dramatically from $26,130 in in 2004 to $191,845 in 2014.

Unlike the mill rate, Kenai’s sales tax rate remained at a stable 3 percent between 2004 and 2014. Nonetheless, sales tax revenue increased during that time from $3,680,000 in 2004 to $6,623,650 in 2014.

According to the Kenai Peninsula Borough Finance Department, the city of Kenai lead the borough in 2015 gross sales by a margin of $150 million. Kenai had $627 million, while Soldotna, the second-highest gross sales earner, had $477 million.

Kenai also had the least seasonal variation in its gross sales. In 2015 each of the borough’s 5 cities had an increase from the beginning of the year to the third quarter — that is, summer — and a decline in the year’s last quarter (except for Seldovia, whose sales peaked in the last quarter at $3.8 million). In most of the cities, the increase was dramatic — most of all in Seward, which had a $82 million difference between sales at the beginning of the year and sales in the summer. Homer and Soldotna had $64 million and $62 million summer increases respectively. By contrast, the difference between Kenai’s first quarter sales and its summer sales was $42 million. This may indicate less reliance on tourism than other borough cities.

In KPEDD’s breakdown of 2013’s total gross sale amount of $548 million, retail makes up a large and growing segment of Kenai’s sales. Of the 29 business types that produced sales data in the report, retail trade is both the largest segment of the sales total, with $269 million, and the one with most growth since 2008, having increased by $103 million.

The second largest business type was also trade — wholesale, rather than retail — earning $78 million in 2015, an increase of $38 million since 2008.

Construction was a close third, with $61 million of 2015 earnings, although it did not see the same dramatic growth — it was up $6 million since 2008.

According to the Situations and Prospects report, 2015’s gross sales represent a recovery to the sales of 2008. Between that year and 2009, Kenai’s gross taxable sales dropped by 35.1 percent, and afterward rose by only 3.9 percent in 2010. In 2011 and 2012 they made large recoveries, with growths of 25.6 percent and 10.7 percent respectively.

2015’s gross sales of $627 have now topped sales in 2008, before the global financial recession.

Reach Ben Boettger at