Property taxes and school funding were the focus of a Kenai Peninsula Borough update delivered by Borough Mayor Peter Micciche to the joint Kenai and Soldotna Chambers of Commerce on Wednesday.

The mayor is preparing to bring forward his budget for consideration by the Kenai Peninsula Borough Assembly, and among the primary focuses of the document, he said, is a reduction in mill rate — the value used to determine the amount of money someone pays in property tax in a fiscal year.

Reducing the mill rate is important, Micciche said, because the combination of sharp increases in inflation and property values are straining borough families.

The general fund mill rate this year is 4.3, Micciche said. That means a person with a $350,000 home in the central peninsula would pay $3,122. He said the budget for next year calls for a mill rate of 3.85 — “the first time its been below four in 34 years” — meaning a person with that home would pay $2,838.

Property tax is used to pay for borough services, including education, solid waste, emergency management, and others. Micciche said the borough is bringing in more in property tax right now than it needs to pay for those services. The borough holds $10 million more in property tax revenue than he wants it to, largely driven by the sharp increases in property values in recent years. Over the last four years, he said, the borough’s property values have increased by more than 30%.

“We are holding too much of your money,” he said. “More than we need to operate and provide the services that we provide to you at a very high quality level.”

That’s why, he said, he supported a resolution killed by the borough assembly Tuesday that would have asked the Alaska Legislature to create a structure for imposing a cap on property value assessment increases.

Another element of the borough’s budget that has been the subject of public attention in recent months is the borough’s funding for the Kenai Peninsula Borough School District. Micciche repeated that the borough is funding its schools to a higher level than any other in the state. The funding Micciche is proposing for the school district in the coming year is around $57 million, which is around $5 million less than the district is requesting and around 96% of the amount the borough can provide its schools according to a calculation based on property values.

Other boroughs are not reaching that level of funding, Micciche said. He shared data that indicated the next two highest funding second-class boroughs, in the Matanuska-Susitna Region and Fairbanks, are around 78% of their caps.

“When someone says ‘make education a priority in the Kenai Peninsula Borough,’ we absolutely have done that,” he said. “I can quantifiably prove that it is a top priority for us.”

If the borough funded to the cap, the extra $5 million expenditure would eliminate the proposed mill rate reduction, Micciche said. He repeated the call to the state to fund education. The price of an apple, he said, isn’t the same as it was in 2017 — the last time the state provided a significant increase to the base student allocation.

State funding has been stagnant, Micciche said, in the face of rising costs.

“The Kenai Peninsula Borough has met that inflationary increase demand.”

That said, Micciche repeated the call to the KPBSD Board of Education to make cuts to “half-full schools.” He said that while the state needs to increase funding for schools, the local district needs to bring its costs down.

“We need our schools to be full and efficient and functional,” he said.

The Kenai Peninsula Borough Assembly will continue budget and school funding discussions at their May 7 meeting. More information will be available at kpb.legistar.com.

This story was corrected on Thursday, April 17. A previous version in one instance mistakenly referred to the proposed mill rate “reduction” as a mill rate “increase,” and mistakenly listed Anchorage instead of Fairbanks as a second-class borough with funding compared to the Kenai Peninsula’s.

Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.