Some, but not all, of the City of Kenai’s budget goals for the upcoming fiscal year are satisfied in a draft budget document presented to city council members for the first time during a Saturday work session.
The work session, held all day at Kenai City Hall, allowed Kenai City Manager Terry Eubank and Kenai Controller Lana Metcalf to present the draft budget and for city council members to give their input. The budget document covers fiscal year 2024, which begins on July 1, 2023, and ends on June 30, 2024.
In Kenai’s general fund, the city is projected to take in about $19 million and to spend about $19.5 million. Once roughly $925,000 in lapsed funds roll over from the current fiscal year, the city expects there to be a general fund surplus of about $436,000 in fiscal year 2025.
That’s compared to revenues and expenditures across all city funds. Across all city funds, Kenai expects to take in about $103 million and spend about $114.5 million.
City council members in January adopted goals for the city’s fiscal year 2024 budget process.
Among other things, those goals included maintaining the city’s existing sales tax and property tax, increasing pay for city employees and compiling a list of the city’s capital projects. Of the eight goals identified in the council’s January resolution, city administration achieved five, partially achieved two and did not achieve one.
Eubank said Saturday that the city partially achieved its goal of increasing pay for city employees. Citing high inflation, the budget would increase the city’s salary schedule by 2% and increase city employees’ base salary adjustment by 4%. The increase in pay reduces the amount of money the city has to spend on capital projects, however, Eubank said the cost is worth it.
“While I didn’t meet the goal, I think it’s needed to make sure that we take care of the most important resource I think the city has and that’s our city employees, and that we stay competitive, and we’re able to attract and retain them,” Eubank said.
Kenai’s general fund in fiscal year 2023 had enough money to fund about $1.5 million worth of capital projects. For the upcoming fiscal year, that amount is reduced to about $1.1 million because of wage increases. The document identifies $710,000 in funding for capital projects for fiscal year 2024, including spruce bark beetle tree removal, replacement of flooring at the Kenai Fire Department and replacement of a park shelter at Kenai Municipal Park.
A key reason that the city’s budget document places an emphasis on capital spending, Eubank said, is because Kenai’s investment in its existing infrastructure has not kept pace with the depreciation of that infrastructure. The value of Kenai’s assets, Eubank said, is decreasing by about $5 million per year.
“What the importance of depreciation represents is … an analysis of a reasonable amount of money that we should be reinvesting in our assets to make sure that we maintain what we have and can move forward in the future,” Eubank said. “We’re not funding at $5 million a year.”
Still, he said, the city has a “good start” through its capital plan, which puts money into existing assets rather than taking on new ones.
Kenai has received about $390,000 more in sales tax revenue during the current fiscal year than expected — about $9.6 million in total. The city is projecting for that number to jump further, to about $9.9 million for the upcoming fiscal year, representing just over half of all the money flowing into the city’s general fund.
The City of Kenai’s final budget document is subject to approval and change by members of the Kenai City Council. Kenai’s draft budget document can be found on the city’s finance page at kenai.city.
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