Assembly considers reinstating fee for service areas

The service areas around the Kenai Peninsula Borough may have to cough up a little more money to help pay the borough’s bills.

The Kenai Peninsula Borough Assembly is considering a resolution sponsored by Borough Mayor Charlie Pierce that would establish a fee that service areas would pay to the borough for administrative services. The borough currently provides legal services, human resources, tax billing and payroll processing, among other services, to the service areas free of charge.

The fee would be a percentage, with the rate set at 2.5 percent, according to a memo from Finance Director Brandi Harbaugh to the assembly.

It won’t be the first time the service areas have had to pay the fee. The assembly instituted a system to collect administrative fees from the service areas in 2006 at two different rates — one for operating funds and another for capital project funds. The fee for operating budgets was set at 6.25 percent and the capital projects fee was 3.04 percent, according to the memo.

Harbaugh told the assembly during the Finance Committee meeting Tuesday that the rate would be presented in the budget document for fiscal year 2019. The resolution before the assembly would approve the institution of the fee and the rate would be set and the money appropriated during the assembly’s budget process.

“The spend that would be coming from the different service areas is identified within the budget document, and then the flow back into the general fund,” she said.

The assembly later voted to reduce those rates for operating budgets to zero, though the capital projects administrative fee remained in place on a sliding scale from .5 percent to 2 percent, according to the memo.

The borough’s 14 service areas provide a variety of services, from fire and emergency to flood planning to senior services. They range in size from the Seldovia Recreational Service Area, which had a total budget of $61,767 in fiscal year 2018 to the borough-wide Road Service Area, which had a budget of about $8.3 million in fiscal year 2018.

Altogether, their operating budgets totaled $24 million in fiscal year 2018, which requires significant staff time at the borough, according to the memo.

“The intent of the admin fee is to fairly allocate a portion of the financial responsibility of the borough’s general government expenditures to the service areas that use those services,” the memo states. “The admin fee is not meant to cover the cost of services that would be incurred by the general fund regardless of the service areas.”

At the assembly’s Tuesday meeting, Harbaugh said the general reception among the service area boards had been positive, though she hadn’t had the chance to address the South Peninsula Hospital Service Area Board about it.

The chairperson of that board, Keri-Ann Baker, asked the assembly at its meeting to postpone the decision to give the hospital’s board time to ask questions about the proposed fee.

“We’re not necessarily opposed to it, we just don’t know enough right now to have a comment, and we’d also like the opportunity to have enough time to open the (borough’s) annex (in Homer), and the timing of this was that we didn’t have enough time to get to one of our borough representatives and open the annex,” she said.

The assembly agreed to postpone a decision on the resolution to the March 6 meeting. Pierce said he was planning to go to Homer before then and would try to meet with the board to discuss the proposal.

The assembly was generally amenable to the proposed fee, with little discussion during the general meeting or at the Finance Committee meeting that afternoon. Assembly member Kelly Cooper said she planned to propose an amendment to the language so the fee could be “up to 2.5 percent” rather than a set 2.5 percent, though she did not propose it at the meeting that evening.

The proposed administrative fee is part of Pierce’s plan to balance the borough’s budget in fiscal year 2019 without implementing a broad-based tax increase. The other major pieces include withdrawing abut $3.6 million from the borough’s land trust fund, which currently has about $7.5 million in it, and cuts elsewhere in the operating budget.

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

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