Assembly approves budget with more school funding, mill rate increase

The Kenai Peninsula Borough Assembly passed its fiscal year 2019 budget with a slight increase to school funding and a property tax rate increase.

At its Tuesday meeting, the assembly approved an $81.6 million general fund budget with $78.8 million in general fund revenues. That still leaves an approximately million gap, reduced from the $4 million in the fiscal year 2018 budget covered by drawing down the borough’s fund balance.

The tax rate increase — upping the rate from 4.5 mills in 2018 to 4.7 mills in 2019, about $50 a year on a $250,000 home — raises about $1.6 million more in property taxes, but the assembly declined to approve other new revenue to close the budget gap Tuesday, though the members are still considering several options.

Assembly members and the public sparred most of the night about different types of revenue, ranging from a proposed bed tax (temporary lodging) to a sales tax increase to a possible tobacco excise tax, but no assembly members proposed any further spending cuts.

Tuesday was the deadline for the assembly to set the property tax rate, known as the mill levy, for the upcoming year. Cooper proposed an amendment to set the mill rate at 5.1 mills, an increase of 0.6 mills. The increase would have generated roughly $4.9 million for the general fund. However, the assembly shot down Cooper’s proposed amendment 6-3, with Cooper, Willy Dunne and Hal Smalley supporting it.

Assembly Member Dale Bagley proposed a compromise of a 0.2 mill increase, raising about $1.6 million. Though that doesn’t cover the gap, Bagley said he hoped that some of the assembly’s other revenue options would go forward.

“I’m hopeful that some of the stuff we’re going to be looking at will actually happen and the voters will approve may be a bed tax, if we can get it on the ballot,” he said. “I don’t know, but I do want to close the gap a little bit. And if we do find some other sources of revenue, including an excise tax, we can look at reducing the mill rate next year.”

In addition to setting the property tax rate, the assembly approved a $652,000 increase in school funding, raising the local contribution $50.39 million to the Kenai Peninsula Borough School District. In concert with a one-time funding boost of $1.4 million from the state, that allows the school district administration to avoid cutting the 11.5 full-time-equivalent teaching positions.

Even with the borough increase, the local contribution is short of the maximum allowed under state law, which would be $51.7 million for the 2018-2019 school year.

The amendment for the additional $652,000, offered by Smalley, passed 5-4, with Paul Fischer, Kenn Carpenter, Norm Blakeley and Wayne Ogle voting no.

The assembly also approved a $30,000 increase for the roads department to help pay for removal of derelict vehicles. Dunne, who proposed the amendment, said the current budget only allots $3,000 for the problem, and the removal of vehicles and equipment from borough roads is important for public safety.

“There are quite a few vehicles,” Dunne said. “I’ve seen ones that have warnings on them that say they’re in the way of maintenance equipment. For a while, there was quite a bit of funding for (removal), and it really helped. But right now, $3,000 just seems inadequate.”

Borough Mayor Charlie Pierce said the administration supported Dunne’s amendment and would be more aggressive about removing the vehicles and equipment and pursuing the people who abandon them.

After the budget passed, Pierce thanked the assembly for the members’ willingness to work together.

“We’ve generated some dialogue, I think, and we’ve created some discussion,” he said. “I think that we’ve learned and have better information that we’ll make decision. I think in the long run it will pay dividends.”

Dunne said he was glad the assembly reached a conclusion but would have preferred to firm up revenue sources for it.

“It’s been a long, drawn-out process to get the budget done but I’m satisfied with the compromises,” he said. “I would have like to see a little more revenue to cover the deficit spending but that may be coming forth.”

Reach Elizabeth Earl at eearl@peninsulaclarion.com.

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