On Wednesday, members of the Kenai and Soldotna Chambers of Commerce heard two of the candidates for Kenai Peninsula Borough Mayor — Linda Farnsworth-Hutchings and current Mayor Charlie Pierce — answer questions about their campaigns and make their pitch to be elected this October. This is part two of the coverage of the forum, where the candidates discussed their positions on a number of issues directly related to the state and local economy. Merrill Sikorski moderated the forum. Chamber members submitted questions ahead of the event.
A third candidate for mayor, Troy Nightingale, was invited to the forum but did not attend.
Are the senior tax exemptions too high, too low, or just right?
Farnsworth-Hutchings: Well, you know, I enjoy that exemption, so I don’t know if it’s too low or too or high or just right. I think that we did this to keep our seniors in the area, and that’s what I think we have accomplished.
Pierce: I agree. I think we incentivized. There was a time when we were trying to attract seniors to come here, and one of the ways we incentivized that was through tax exemptions. I think it would be pretty disingenuous at this time to change that. You know it depends. I think we have to look at the entire package. However, when you look at the ability to provide services and the cost that they come with, as the state evolves and makes decisions at the state level, we will have local impacts as they shift those costs to the local level. That’s what they’re trying to do. Local governments have the taxing authority. We’re the ones that can actually tax to collect the fees for services and so on.
You’ll see that, in Alaska, we’ve been afforded the luxuries of having a government paid primarily by the revenues that the state generates. I think you’ll see that shift. But I think it would be disingenuous at this time to try and change that exemption on seniors. I think that it encourages them to come here and we need to continue to encourage them to come here and live.
What is your opinion on seasonal sales taxes on non-prepared food items?
Pierce: I’ve always been a person that looked at food as a basic necessity. And if the priorities were right, and the budgets were shifted right, I would hope that we could not tax food. I would prefer to do it that way. However, sales tax revenue is generated and it’s much-needed to help support the funding of our schools.
It’s all about models. It’s about us deciding on what our priorities are and developing that model in a way in which we all agree upon. And that’s really what it’s about. We have a certain number of people that live here, we have property that has certain values, and we have our costs we have to cover. It’s about adjusting those things and prioritizing. I would prefer to have no tax on food, but, however, we have it. I agree with it for now. It’s needed, it’s necessary, and I would say we’ll have to look at the whole mix as the state evolves.
Farnsworth-Hutchings: Well, nonprepared food items, I don’t have a problem with at all. I want to make sure though, that we do keep our sales tax on prepared foods. There’s a lot of tourism that comes down into this area and they are stopping at your fast food stores, your restaurants, and even going through the deli at Fred Meyer and Safeway. But the other thing that people do need to understand is, a lot of times they complain the sales tax on food, but those that cannot afford the food or the sales tax are usually under a federal or state program so they’re not paying sales tax on those foods as it is right now.
With a shrinking fund balance and almost no capital projects planned, how do you propose addressing the deferred maintenance needs of so many of the borough buildings, including school district buildings?
Farnsworth-Hutchings: As I said, I would definitely go through this budget. There are things that we are able to do in-house, which makes it much easier than contracting out for everything. And we do have some COVID money that is being made available for this, so I think it’s just sitting down and going through this budget line by line, person by person.
Pierce: In my budget, I had put an extra million dollars in for the maintenance on our buildings. Typically we put about $1.3 million in there. I added another million to it.
That helped pick up some of the maintenance that has been done along the way. We’ve done a lot of out-of-pocket repairs. We changed out 13 boilers in your district. Roofs have been done on your schools, and the boilers are all in good shape. State-of-the-art boilers will save energy costs for direct savings to this school district.
I think the team that I work with every day has put a smart plan together to make repairs. We’ve put in security, wired every school for security with the smart doors. It’s a matter of getting our personnel trained now to do the installation on those devices. I’ve gotta say we’ve got a very good plan. It’s called a plant replacement type concept, to fix things out-of-pocket, not going to bond or taking on debt, and I’ve tried to avoid that.
With the state facing over a billion dollar deficit, what are your thoughts on the potential of community assistance and school bond debt reimbursement being zeroed out, equating to costs shifting to local governments?
Farnsworth-Hutchings: My real problem with that 70/30 split is that we went and we built buildings on the premise that we were going to have the assistance for those loans, that bond indebtedness.
It would be, to me, similar to going and getting a loan at the bank, making my payments religiously, and all of a sudden the banker saying, ‘You know, we’re going to add a little bit more to that loan because, guess what, we’re having a tough time.’
That’s not right. They need to come through with their bond indebtedness promise.
Pierce: Those bonds came with some clear messaging from the state. It said ‘may.’ There was a word used in that contract agreement between the state and the boroughs that said they may pay this. They may pay this. It didn’t say they would always promise to pay it.
So when we signed those and we inked the deal, surely both parties had good intentions, but I think that we will always, when we enter into agreements like that, be subject to carry on that debt.
We are looking $2.6 million on the roof payments. Annual payment is about $2.6 million a year, and this year we’re paying the full amount. Last year we paid 50%, and this year we’re paying 100% of that debt. How do I feel about it? You know, I don’t like bonds. I would try to put a budget together where we pay our own way and find a way to do that and avoid bond indebtedness if at all possible.
The proposed budget for 2021 eliminated all funding for the Kenai Peninsula Tourism and Marketing Council, and the assembly subsequently restored that funding. Should that item be funded in the next fiscal year, and what is your opinion on the borough funding non-departmental services?
Pierce: As your mayor, all I’ve every asked for in the funding of these agencies is that they actually do something, demonstrate that they do something. I would expect that when you put a dollar in the bank, you expect a return on that dollar. When you buy something in the way of services or pay somebody to do something for you, you would expect a return, and as your mayor I would expect that you would expect me to make certain that that is in fact the case.
I zeroed that budget because I did not believe that we were receiving a good, equal exchange on that. We have since gone out and contracted with Agnew Beck. They’re getting ready to complete a project for the borough and you’ll see a new program.
I believe we really shortchanged ourselves as a community. We narrowed down on one aspect of who we are as a borough, when we could be advertising the entire borough and all the aspects of the entire borough. I think that we have given one agency that responsibility, and it’s a huge responsibility. I think we need to spread it out, and I do support the funding of tourism and marketing.
Farnsworth-Hutchings: I firmly believe that the borough was getting a lot for their investment, and they had an RFP, and they were following the rules for that RFP. That money wasn’t given to them willy-nilly. It was given to them after they performed what was asked for in the RFP, and it was supposed to be a reimbursement for all of the items that they had taken care of.
I sit here and I look at your lodge owners, and your guides, and your fly-in fishing, fly-in hunting, and whatever sightseeing, and these people all belong to this organization and they paid dues and those people bring sales tax dollars to your borough. So I am for funding Kenai Tourism and Marketing.
Realtors in the area say that vacant land sales in the borough are up and that the market is hot. What do you attribute that to?
Pierce: You know, I’ve said ‘we’re open for business, come on down.’ I’ve tried to convince people living in Anchorage under the Berkowitz administration that there’s a better place to live.
Certainly on the peninsula, we’re open for business. I believe in the rights of individuals and I believe that Alaskans are responsible individuals and they can be given information and then utilize it in their best interest. And I think that we need to trust the people. I think that’s something that perhaps some government agencies have a lacking in trust in the people and their ability to make decisions.
Farnsworth-Hutchings: Well, I attribute it to a number of things. We have people moving into the area because they do not like living in the Lower 48 where they are so controlled.
They are living in apartment buildings, small subdivisions. They cannot access services. And so coming to Alaska is like ‘OK, I’ve been wanting to go for a quite a while, it was going to be a vacation, but now I’m moving.’
I’ve seen this happen over and over, and I’ve talked to realtors who said they just can’t believe it. Plus, there are interest rates right now that are making it very attractive to buy.