The City of Soldotna saw financial returns in unexpected places during the COVID-19 pandemic that resulted in the city taking a smaller hit than initially anticipated.
In budgeting for FY21, Soldotna City Manager Stephanie Queen said, the city projected a revenue loss of about $2.46 million. In reality, the city’s financial hit due to the pandemic was not that severe. When planning for the financial impacts of the COVID-19 pandemic, Queen said, they considered a loss of revenue from things like campground fees and sales tax, as well as rental fees for city facilities. While they accurately predicted a loss in facility rentals, revenue from campground fees increased in FY21 and sales tax revenue was higher than last year.
It is for that reason that the city is now budgeting for about $10.47 million in operating revenues for FY22. What looks at face value like a projected increase of more than 30% in revenue is really the result of conservative budgeting by the city last year.
“Revenues budgeted for in FY21 were substantially lower than prior years because the document was prepared at the beginning of the COVID-19 pandemic, and the impact of the public health emergency on several sources of City revenue was projected to be quite severe,” the budget document, crafted by Queen and Soldotna Finance Director Melanie Imholte, says.
Queen echoed that theme on Friday, specifically noting that their conservative budgeting approach last year will always make FY21 stand out.
“This FY21 budget is going to be kind of a weird blip in our budget history, because there was so much uncertainty,” Queen said.
The Soldotna City Council will be formally presented with the draft of the city’s biennial operating budget for fiscal years 2022 and 2023 during two work sessions with city administration next week. Those work sessions are open to the public but will also be streamed live via Zoom. FY22 begins on July 1, 2021 and ends on June 30, 2022. FY23 begins on July 1, 2023 and ends on June 30, 2023.
It will be the first time the city mulls a biennial budget, which budgets out for two years instead of one. The council voted to migrate from an annual to a biennial budget last year. In recommending the city adopt a biennial budget process, city administration said it would facilitate a “more effective and strategic use of staff time and resources.” Under the ordinance approved by council, Queen is still required to present a capital improvement program each year. Queen will also present any amendments to the budget before year two of the biennium.
For FY22, the city is projecting about $13.66 million in total operating revenues and about $14.3 in total expenditures. It’s expecting total expenditures to increase by about 5% from FY21 due to increases in the cost of living, dispatch service fees from the Kenai Peninsula Borough and anticipated increases in account categories necessary to restore those categories to their pre-COVID levels, among other things. That is compared to estimated FY23 revenues of about $13.86 million and expenditures of about $14.27 million.
Not included in Soldotna’s budget is money the city received through federal COVID-19 relief, which the budget says provided “significant savings” to the city. In total, Soldotna received about $10 million in CARES Act funding, including $7.38 million from the State of Alaska and about $2.56 million from the Kenai Peninsula Borough. Some of the city’s CARES Act funds were put toward its pandemic response and mitigation measures, while most of those funds — about 75% — were used to offer grant and relief programs for residents. CARES Act funds are reflected in the city’s COVID-19 Relief Special Revenue Fund.
Among the sources of revenue impacted were sales tax, facility rental fees at the Soldotna Regional Sports Complex and low campground returns.
Other funds managed by the city that have their own operating budgets include the Utility Fund, the Airport Fund, the Street Assessments Funds, the Equipment Replacement Fund and the Equipment Replacement Fund. Queen said Friday that no changes are being proposed to the city mill rate of .5 or to its sale tax rate of 3%.
Additionally, formal letters requesting funding from the City of Soldotna in FY22 have already been submitted. The Soldotna Historical Society has requested $5,000; the Tsalteshi Trails Association has requested being funded at $15,000; the Boys & Girls Clubs of the Kenai Peninsula has requested $40,000; and Soldotna Area Senior Citizens, Inc. has requested that the city increase its funding by 54%, or to about $12,700.
Soldotna’s full budget draft can be found on the city’s website at soldotna.org.
Reach reporter Ashlyn O’Hara at email@example.com.