A reduction in mill rate and “adequately funded” basic services headline the borough budget proposal by Kenai Peninsula Borough Mayor Peter Micciche for the coming fiscal year starting July 1. The draft document was presented Tuesday to the borough assembly, which gets final approval of the budget.

The draft budget proposes a reduction in mill rates, from 4.3 to 3.85. The reduction has been described by the mayor repeatedly in recent months, as he cites rising property assessments that are generating more revenue than he says the borough needs to provide services. The budget also follows his “balanced budget philosophy” of spending increases at or below around 2.5% year-over-year.

The amount of money someone pays in property tax in a fiscal year is calculated by dividing the mill rate by 1,000 and then multiplying that number by the assessed property value. Beyond the reduction in the borough-wide mill rate to 3.85, the budget document says that mill rate reductions are also projected for six other “special revenue funds,” including the mill rates imposed for the Nikiski Fire Service Area and Central Emergency Services.

“Most taxpayers will see a reduction in their property tax bills as a result of the reduced mill rates,” KPB Finance Director Brandi Harbaugh said during a budget presentation to the assembly. “Assessed values have increased 34% over the past three years. The proposed reductions will reduce the impact to the taxpayers.”

The borough is projecting to bring in nearly $181 million in revenue next fiscal year. Around half of that total comes from property taxes, a quarter comes from sales tax, and the remaining money comes from fees, federal and state awards and interest earnings.

The budget describes expenditures of nearly $180 million, with around $68 million — more than a third — of that total going to education. The borough provides funding to the district through both monetary and in-kind contributions, and also provides other services that are included in that total.

The borough is spending less on most of its services in the coming year, per Harbaugh’s presentation. Only education, solid waste and public safety are seeing increases.

The assembly on Tuesday decided that it would provide at least $57 million in direct contributions to the district, less than a requested $62 million, while committing to continuing to explore the possibility of increasing school funding during the budget process. Micciche said last month that an increase to school funding above $57 million might eliminate the proposed mill rate increase.

Education is funded by 100% of the borough’s sales tax revenue, 38% of its property tax revenue and 21% of other revenue.

Among other changes to public safety, an addition of four firefighters for Central Emergency Services is in the budget. The increased staffing, CES leadership said at a November meeting of their advisory board, would allow for full-time staffing of the sometimes-vacant CES Station #6 in Kasilof. Public safety is the second largest spend for the borough, at 18% of total expenditures.

Solid waste, per the budget proposal, is facing “inflationary impacts on contractual services,” causing the rise in cost. Solid waste accounts for 8% of the borough’s spending.

The assembly will hold public hearings on the budget at both their May 20 and June 3 meetings before providing final approval.

The text of the budget and a presentation on the document to the assembly’s finance committee on May 6 can be found at kpb.legistar.com.

Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.