Criticism mounts against nondepartmental borough funding

The Kenai Peninsula Borough’s funding for nondepartmentals is often a popular punching bag for criticism, frequently intensifying during election season. This year is no different.

Each year, the borough allocates varying amounts for three or four nonprofits as contractors, usually billing it under economic development in the budget. For the past two years, those nonprofits have included the Kenai Peninsula Economic Development District, the Kenai Peninsula Tourism Marketing Council and the Small Business Development Center. For a number of years before it, the borough also included funding for the Central Area Rural Transit System, which was eliminated in the fiscal year 2017 budget.

The borough also provides funds to the Kenai Peninsula College, but those come from a 0.1 mill rate levy specifically dedicated to the college.

During the borough’s budget process in May and June, then-Kenai Peninsula Borough Assembly member Stan Welles proposed zeroing out the borough’s usual funding for the Kenai Peninsula Economic Development District, the Kenai Peninsula Tourism Marketing Council and the Central Area Rural Transit System, leaving only the Small Business Development Center. When that amendment to the budget failed, assembly member Wayne Ogle proposed reducing funding for all the nondepartmentals by 20 percent.

Ultimately, the assembly passed a budget with funding for three, with reduced amounts for the Small Business Development Center and for the Kenai Peninsula Tourism Marketing Council. However, the latter has come under fire again during the campaign cycle. CARTS again did not receive funding in fiscal year 2018. After the funding cut in fiscal year 2017, which CARTS used to match federal funds, the organization reduced service on weekends and trimmed back its voucher program.

“We must eliminate funding,” said Duane Bannock, a candidate for the assembly seat in District 2, at a forum before the joint Kenai and Soldotna chambers of commerce Wednesday. “And I have some targets. The (Kenai Peninsula Tourism Marketing Council) $306,000 is one of those.”

One of the questions at the forum asked candidates if they would support funding for nondepartmentals. Support was about evenly split, with assembly candidates Brent Hibbert and Hal Smalley saying they definitely supported the funding, Bannock and candidate Norm Blakeley saying they thought the organizations should find funds elsewhere, while Leslie Morton and Dan Castimore offered more middle-of-the-road support with some caveats.

The nondepartmentals are aware of the criticism and trying to provide more communication and accountability to the assembly in return for their funding. The Small Business Development Center, connected to a statewide network through the University of Alaska and U.S. Small Business Administration, uses subscription services to track its clients’ success. Small businesses and entrepreneurs get access to a lot of quality metrics through the center’s Soldotna and Homer offices on the peninsula as well as others around the state, said business advisor Cliff Cochran, who is based in the Soldotna office, in a May presentation to the borough assembly.

“When things are getting tight, how do you (show how you) impact the community?” he said. “Well, we have a cheat sheet for you that shows our impacts.”

The center was the one nondepartmental Welles’ amendment did not target. Ogle’s amendment reduced the funding for it as an across-the-board 20 percent cut to all nondepartmentals.

Kenai Peninsula Economic Development District

Last year, KPEDD executive director Tim Dillon began providing quarterly oral reports to the assembly, complete with updates on employment and wage data on the peninsula.

Since taking over as executive director in August 2016 after serving as Seldovia’s city manager for seven years, Dillon launched into communicating more often with the assembly and fleshing out the organization’s data publications. In addition to the five-year Comprehensive Economic Development Strategy and the annual Situations and Prospects report, Dillon has also worked with an economic research consultant to provide quarterly employment numbers and begun breaking out city-specific data.

Dissemination of data is key, as is communication, Dillon said. In the past year, he said he’s done more than 30 presentations to various groups and government bodies around the peninsula. The information isn’t comprehensive and KPEDD does not pitch itself as an authority, but Dillon said their goal is to provide as much help to businesses when they need it as possible.

“We don’t have all the answers, but we’ll find out,” he said.

The organization operates on a relatively small budget — with two full-time employees and fees for consultants and travel, KPEDD draws funds from the borough as well as from the U.S. Economic Development Administration and from renting out space to various businesses in its building. The borough used to do its Situations and Prospects report in-house through an economic development office, but has since outsourced it, which is cheaper for them in the long run, Dillon said.

“If we weren’t doing this, somebody would have to be,” he said. “And we’re doing (the reports) a lot cheaper. As I’ve said to (the assembly), you’re making an investment.”

Kenai Peninsula Tourism Marketing Council

KPEDD by comparison has gotten away relatively unscathed at the assembly — members regularly express their gratitude for the ongoing reports and approved Borough Mayor Mike Navarre’s recommended funding level. Kenai Peninsula Tourism Marketing Council, however, did not — the assembly cut about $34,000 out of the borough’s funding for the organization, for a total of about $306,000 in fiscal year 2018.

Some of the most vocal critics specifically went after the tourism marketing council, saying it was ineffective and inappropriate for the assembly to be underwriting private businesses. Executive Director Summer Lazenby, who took over leadership at the organization at the end of May, said she heard a lot of anecdotal information from critics of the organization that it wasn’t visible. However, putting the tourism marketing council’s name in the public is not its job, she said.

“I’m not marketing the Kenai Peninsula Tourism Marketing Council,” she said. “I’m marketing the Kenai.”

However, the organization is trying to produce more metrics to show its impact, she said. Citing a recent study from the McDowell Group highlighting numbers specifically about tourism on the Kenai Peninsula, she said direct tourism employment contributes about 10 percent of the wages on the peninsula and generates about 2,500 direct jobs, as well another 600 indirect jobs, she said. Overall, about 500,000 people came to the Kenai last year, not including visitors from other areas of Alaska, she said.

The tourism marketing council can’t take responsibility for all those visitors, but given that the industry has grown since the organization began its work, should take credit for some, she said. It’s unequal to request exact justifying statistics for the tourism industry — the borough has employed people to solicit oil and gas development in the borough in the past, but oil and gas companies are not asked to justify their production or economic activity in the borough the same way, she said.

“It’s the same (economic impact) with tourism,” she said. “If tourism is doing well, that has an impact on the bottom line of the borough.”

Kenai Peninsula Tourism Marketing Council splits its funding between borough support and membership fees, which it raised about a year ago. Lazenby said they haven’t re-evaluated what a fee hike would do since then, but to make up for the entire loss of borough support, it would be a significant increase in the membership fees.

Former director Shanon Davis began giving quarterly reports to the borough assembly around the same time Dillon did, keeping the assembly up to date with website traffic and engagement with the organization’s marketing. Lazenby says they’re still tracking that and planning to find other metrics to track their reach, but it takes time. Coming from a background in science, technology, engineering and mathematics and most recently from an education position at the Challenger Learning Center, she said data is important to her and she plans to continue to track the organization’s marketing efforts, keeping up with modern marketing trends.

“I want to be able to put good data out there,” she said. “…It’s a changing atmosphere and we’re going to do our best to change with it.”

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

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