Kenai raises mill rate

  • Thursday, June 5, 2014 8:35pm
  • News

After a failed attempt by Kenai City Council member Brian Gabriel to slash more than $300,000 from the budget to avoid a mill rate increase, the City of Kenai passed the fiscal year 2015 budget with more than $92,000 surplus in the general fund at Wednesday’s meeting.

The new mill rate jumped from 3.85 to 4.35. The city council voted down $15,000 for a storefront improvement program, passed changes to city health insurance renewal quotes and added $80,000 to complete playground designs for Municipal Park. During the course of discussion, the council passed seven amendments to the budget, which cut $52,200 and added $85,000 for a net increase of $63,800.

The City of Kenai general fund for FY2015 is $16.2 million with a $92,414 surplus.

Kenai City Manager Rick Koch said the budget process proved to be tumultuous given the late changes to the insurance quotes. The budget, he said, is operational with no significant new projects that would dip into fund reserves. The city saved more than $97,000 by switching from United Healthcare to Premera Blue Cross Shield of Alaska for healtcare.

“I think we got lucky with the quote we received,” Koch said. “That has not been our experience in any of my 10 years I’ve been here.”

Gabriel, who called in from Boston, Massachusetts, said he was hesitant to raise the mill rate. He would like to see the city make cuts, but not have a “bare bones” budget given the uncertainty of future healthcare costs.

Gabriel worked with Koch to look at areas where expenditures could be decreased to maintain the property tax mill rate at 3.85 — a rate that has not been increased in five years. If the rate stayed at 3.85 mills, the budget would have had a deficit of $303,829. Gabriel introduced 19 amendments in a memo to the council, but only motioned 12. If all 19 were adopted, it would have resulted in a budget surplus of $54,324 in the general fund.

Three of his 12 amendments passed. The council voted to eliminate a $19,200 increase to council stipends, decrease $2,000 from travel budget and strike $31,000 for a rotary broom to be purchased from the equipment replacement fund.

Gabriel failed to get a second motion to eliminate $50,000 on a feasibility study for a convention center and other park planning. He also did not get a second motion on his amendment to remove nearly $25,000 from the fire department, money that will be used to buy a second set of turn out gear for firefighters.

The storefront improvement program, which passed through the Planning and Zoning Commission during its May 28 meeting, had not been brought before the council and was a late addition to the budget. Vice Mayor Ryan Marquis said he did not feel comfortable funding a grant project before council had discussed the details.

Council member Bob Molloy said he didn’t support raising taxes while showing support for a grant program. He said business owners can pay for improvements on their own and council should work to keep the mill rate flat before investing in business improvements.

The motion to approve the Storefront Improvement Project failed 4-3 with yes votes from Mayor Pat Porter and council members Mike Boyle and Tim Navarre.

Boyle said, in his opinion, the residents of Kenai have had a low mill rate for “a while” and a half-mill increase is not an extreme cost. He commended the administration for their work to address the insurance issues and produce a balanced budget.

Koch said for a $200,000 house, a half mill increase costs an extra $100 for homeowners.

After Navarre’s motion to add $5,000 for Planning and Zoning commissioners to attend training was passed, Kenai Finance Director Terry Eubank calculated a savings of nearly $172,000.

The last amendment came from council member Terry Bookey, who motioned to add $80,000 for Municipal Park playground upgrades. The FY2015 draft budget had $120,000 allocated for playground equipment for 2-5 year olds. The council previously agreed on a proposal from the Parks and Recreation Commission to replace existing playground equipment for 5-12 year olds and complete the park under the “Enchanted Forest” theme.

The motion passed 5-2 with Gabriel and Molloy casting the two no votes. The two, who both participated telephonically, also cast the two dissenting votes to raise the mill rate.

Marquis said the community had expressed a desire to see the Municipal Park completed and with the cost estimated at about $200,000. The city would need the funds in the FY2015 budget to complete the park next summer.

Bookey said the fact that no residents attended the council meeting where officials passed the budget showed him they have confidence in the council responsible for allocating taxpayer dollars.

“It tells me we must be doing a good job,” he said.

Gabriel said he would have liked to maintain a flat mill rate this year and build a fund balance for a long-term view for costs like the bluff erosion project, which could cost the city money as the project moves forward.

“Next year we may find ourselves in a more challenging position,” he said. “I hope we are not changing the (mill rate) again.”

Reach Dan Balmer at

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