Education and the borough budget dominated the conversation at a forum for the three borough mayoral candidates in Funny River on Thursday.
In October, Kenai Peninsula Borough voters will choose a new mayor to replace current Borough Mayor Mike Navarre when he is term-limited out of office. Three people — Linda Hutchings, Charlie Pierce and Dale Bagley — have thrown their hats into the ring for the seat.
In front of a crowd of about 40 people at the Funny River Community Center on Thursday night, the candidates answered questions about borough issues. All three identified balancing the borough budget as the most pressing issue at present — due to declining contributions from the state, falling property tax revenue and an increased contribution to the Kenai Peninsula Borough School District, among other factors, the borough is facing an approximately $4 million shortfall in fiscal year 2018 after the assembly passed the budget in June.
Bagley, who currently represents District 4 on the assembly and served as mayor for two terms from 1999–2005, said the shortfall is concerning and attributed it in part to a number of tax reductions in the past decade, including increasing the personal property tax exemption from $20,000 to $50,000 and the reintroduction of the sales tax exemption nonprepared foods for nine months of the year. The assembly has done some cost-cutting, including closing Central Peninsula Landfill one day per week in the winter and combining borough departments.
“It hasn’t been that the borough has been spending more money,” Bagley said. “…It’s just the loss of some of the revenues coming in, and that makes it a little tough to deal with that issue.”
Hutchings, who served as chief financial officer of Hutchings Auto Group for the majority of her career and still serves as a corporate officer, emphasized her background as an accountant in reference to the budget.
“You have people that still want their services, but they have to be paid for,” she said. “The only thing I can tell you, since I am an accountant … I love drilling down into budgets. So that’s what I intend to do, to drill down, see what’s actually in those line items to see if there are those things we can make a change in.”
Pierce, who retired from Enstar Natural Gas Co. in June 2016 after 39 years, called himself “an operations guy” and said in times of tight budgets, projects and services would have to be prioritized based on revenue available rather than looking for additional revenue to meet the budget. Given the ongoing state fiscal crisis and economic recession, he said he did not support raising taxes right now.
“What I would do as your mayor is to create a chart with the ‘mission critical’ things we have to do — things we have to do to deliver the services here in the borough, and I would present a balanced budget to the assembly,” he said.
All three said they strongly supported funding the Kenai Peninsula Borough School District to the maximum amount possible, with individual caveats. About two-thirds of the borough’s budget each year goes to support the school district in a local contribution. The maximum amount allowable is determined by how much the state allocates through its base student allocation, with the maximum referred to as the cap. The assembly raised the funding it contributed to the school district in the fiscal year 2018 budget, but did not fund to the cap.
Bagley said he supported funding education as much as possible and added that he’d like to see more vocational and technical education opportunities so the graduates are not solely encouraged to go to college and leave the peninsula, taking their educations with them.
“I think that the more that the school district does vocational training or at least makes available for young people to go into the vocational programs that we have here on the Kenai Peninsula … and not just send them off to jobs and colleges elsewhere and they don’t return, I think it’s great,” he said.
Pierce said it would be difficult to fund to the cap while the borough has a deficit, but supported the idea of forward-funding the school district and having the borough administration work more closely with the Board of Education. Currently, the board has to formulate and finalize its budget before the borough finalizes its own budget, without knowing precisely what the borough’s contribution will be. Additionally, for the last two years as the Legislature has dragged on into special sessions without agreeing on a budget, the Board of Education has not even known what the state’s contribution will be, and thus the amount the borough can fund.
Another key issue is the future for the borough’s two hospitals, particularly Soldotna’s Central Peninsula Hospital. Over the years, the question of whether to privatize the hospital or seek a private partner to operate it has come up multiple times, most notably in 2010, when the assembly rejected an ordinance to form a joint venture with Texas firm LHP Hospital Group.
Both Bagley and Hutchings strongly said they would oppose privatizing the hospital, though the decision is ultimately in the hands of the borough assembly. Hutchings said she has served on task forces on health care under three different administrations and has a long history with the hospital — her parents, homesteaders Jack and Dolly Farnsworth, were instrumental in its founding — and said she’s happy to see its services expanded and financially efficient compared to other hospitals in Alaska.
“You can’t ask for better services than that,” she said. “…I think you guys should all be extremely proud of what we have and I would never look at selling it.”
Pierce took a slightly different line, saying he wasn’t interested in selling the hospital until it was no longer profitable. Pierce, who served on the assembly from 2008–2014 and was present for the debate over the joint venture, sponsored the ordinance to form the joint venture.
“Keep in mind that the hospital is paying the debt service today,” he said. ‘If the hospital ever gets into a position where they’re not able to pay the debt service on the debt, I think each of us ought to have an intelligent conversation about that and make some decisions as to whether we wish to pay more taxes on the hospital… or if we choose to sell it.”
Voters will decide the next mayor at the Oct. 3 regular election.