At the first joint in-person luncheon of the year, members of both the Kenai and Soldotna Chambers of Commerce heard from Kenai Peninsula Borough Mayor Charlie Pierce, who gave a presentation Wednesday on the state of the borough’s finances in the wake of the COVID-19 pandemic.

Pierce emphasized that the pandemic drastically changed the way that he and his administration have been approaching this year’s budgeting process. The borough expects to receive about $8 million less in revenue for fiscal year 2022 than it received in fiscal year 2019, when Pierce first took office. With $76 million in revenue forecast for FY22 and about $80 million in projected expenditures, the borough is looking at a budget deficit of about $4 million for the upcoming year.

“You go back to a year ago, James (Baisden) and I were sitting in the conference room and we had a map on the board with all the priorities listed on all the things we were going to do, and we were sitting on about $26 million in fund balance,” Pierce said. “February came and we tore that piece of paper off the wall, and everything that was on it went in the trash.”

At Tuesday night’s meeting of the Kenai Peninsula Borough Assembly, the Kenai Peninsula Borough School District requested about $53.4 million for its FY22 budget. Pierce’s presentation Wednesday showed $43 million in funding for the school district as part of the borough’s projected FY22 budget. Pierce took the opportunity during the presentation to defend his stance that the borough would not be matching the district’s request.

Pierce said that the district’s request would leave the borough with a deficit of about $14 million, which would nearly deplete the borough’s current fund balance of about $15.5 million. Pierce said that there have been discussions about raising the borough’s property tax mill rate from 4.7 to 6 in order to make up for the deficit, but he did not express support for that alternative.

“We have a plan to (increase the fund balance), and we don’t have to raise the mill rate to do it,” Pierce said. Pierce mentioned $9 million that the school district will be receiving over the next two years, saying that those funds should be used to offset the district’s budget reductions. District superintendent John O’Brien said Tuesday night that those funds are intended to help students who have fallen behind in the last year due to the nontraditional school year and would likely be spent on things like tutoring and summer school programs instead of general budget items. Pierce was asked Wednesday if the district had the authority to use those funds for supplementing the budget rather than for a specific purpose, he said he didn’t know, but he’d like to see them try.

“With CARES money, you have to connect the dots to a COVID event, and I think it’d be pretty easy to do,” Pierce said. “My suggestion was that you don’t lay off any teachers … I don’t think any teacher should ever be held hostage or worry about whether they have a damn job or not. It’s pretty easy for me. You’ve got X number of students and plenty of square footage of buildings. We have more square footage of buildings than we have students today, so you might want to figure out how to get rid of a few buildings.”

Another point of contention between the school district and the borough is a $30 million bond proposal for deferred maintenance projects on school buildings within the borough. Pierce said that he thinks the essential repairs can be done in-house for about $20 million — not including the construction of a new school building for the community of Kachemak-Selo. A previous bond proposal to pay for that school building was rejected by voters in the last municipal election.

“It’s a matter of building a $15 million school for 40 students at the end of East End Road,” Pierce said. “You voted on that last October and you said no. And we hear you, and I think that was then and this is now.”

In addition to questioning the price tag for construction, Pierce said that he is asking legislators on the state level to reevaluate the borough’s current obligation to pay about $6 million of that $15 million.

“I want the educational community in Juneau to look at their ed specs and ask the question: Can we afford to continue to do things today at the level and extent that we were when we could afford it? We can’t. It’s unreasonable. We do need to build a school at the end of the road there for those students, but I question whether it needs to be $15 million.”

Reach reporter Brian Mazurek at bmazurek@peninsulaclarion.com.