After several weeks of budget work sessions, the City of Seward’s operating budget for 2025 and 2026 was the subject of public hearing at a meeting of the Seward City Council on Nov. 12. After over an hour of public testimony during the meeting, the council postponed several resolutions connected to the budget and voted against introduction of an ordinance to increase the city’s bed tax.

Discussed during the meeting were a series of legislative items paired to changes in the new budget, including a proposed increase of Seward’s bed tax, a new agreement with the Boys & Girls Clubs of the Kenai Peninsula, accepting of a compensation study that would support 8% raises for city employees and establishment of a new firefighter/emergency medical technician in the Seward Fire Department.

Building a budget

The 2025 and 2026 operating budget, according to an agenda statement by Seward City Manager Kat Sorensen included in the agenda packet, describes revenues of $42.5 and $42.9 million for the two years, against expenditures of $41.7 and $40.5 million. The city’s mill rate of 3.84 is proposed to remain the same, as is the city’s sales tax, though the budget describes and accounts for the increase in the bed tax rate that failed to be introduced during the Nov. 12 meeting.

“It is a heavy document,” Sorensen said on Nov. 12. “We spent five or so work sessions talking through it.”

The last three Seward budgets, Sorensen said, have been compiled by three different city managers, making “finding a consistent theme” at times difficult. She said that some of the choices made in the 2025 and 2026 budget were guided by a conservative theme to forecasting sales tax numbers established in previous documents. Sorensen said her office could return at the Nov. 25 meeting with numbers derived instead from actual revenues of 2023 to help the council be “more liberal in your forecasting,” while making changes like potentially not supporting the increased bed tax.

Increasing revenues

Seward’s bed tax, according to an agenda statement by Deputy City Manager Jason Bickling, was initiated by Seward voters in 1995 at 4%. That tax has not been modified since its creation.

The city in 2023 collected more than $840,000 in revenue from the tax, per Bickling’s statement, but the proposed budget calls for $1,389,066. An ordinance considered by the council on Nov. 12 would increase Seward’s bed tax to 8%. That ordinance was set for introduction but was opposed by a split 4-3 vote. Council members Robert Barnwell, Julie Crites and Casie Warner in favor.

A message from the Seward City Clerk’s office on Nov. 18 says that Vice Mayor John Osenga has reconsidered his opposing vote, so the ordinance will again appear at the Nov. 25 meeting. The ordinance would require five votes in favor of reconsidering to be brought back up.

“The City of Seward recognizes the need to diversify revenue in a manner that minimizes the burden on residents and year-round community members,” the budget document reads. “An increase in the bed tax allows for that.”

Several in the tourism and hospitality industries spoke during the meeting against the ordinance. Nicole Lawrence, a Seward property manager, said that an increased tax might drive visitors to stay outside of Seward or stay fewer days in the city. She said she wanted more communication from the city about the tax, calling it a “preemptive, knee-jerk” reaction to the bed tax proposed by members of the Kenai Peninsula Borough Assembly this summer.

Pamela Eiting, an owner of the Breeze Hotel, Restaurant and Lounge, said that her business was already burdened by increases in electricity rates, a lease paid to the city, the soon-to-rise minimum wage, and necessary remodel to aging elements of the facility.

“This doesn’t seem to take businesses into consideration,” she said. “The average stay in Seward might be decreased because of these bed taxes. We want to do what we can to keep people in Seward.”

Council member Randy Wells said that he is a member of the tourism industry because he owns and operates an Airbnb, also that he had reached out to others in exploring the possibility of a bed tax. His “most important goal,” he said, is to fund a wage increase for Seward employees.

“What I’m recommending is that we forego enacting a bed tax at this time,” he said. “I believe that we can fully fund the wage study by adjusting our revenue income projections.”

Despite that, he said that he expects either the borough or the state to soon bring forward a bed tax — “I think that we would all agree that if there’s going to be a tax implemented, I want it to stay right here at home.”

With the bed tax failing to be introduced, Sorensen said that she would come back with a modified budget proposal that increases Seward’s projected sales tax revenue while staying “within that conservative range.” Sorensen said she would then need to “do some double checking” to ensure that the budget can still cover the proposed expenses — including the proposed wage increases for city employees.

That difference, she said, would be raising the projected roughly $6.5 million in sales tax revenue to around $7.8 million, while also losing some of the additional revenue that would have been generated by increasing the bed tax.

“We could make it fit in some way, shape and form,” she said. “I will do everything in my power, my fiber, my being, to make sure that the wage study stays the same within that.”

The cost of living

The city council also considered during the Nov. 12 meeting a resolution that would accept a classification and compensation study that would result in an 8% increase in personnel costs over this year’s budget, a total of $757,685 newly spent for Seward’s 73 full-time employees.

An agenda statement included with the resolution says that Seward’s pay scale “is not competitive with other municipalities across nearly all departments, especially in Public Safety and the Finance Department.”

The resolution would give Seward employees an average 8% wage increase, followed by an annual 1.5% cost of living adjustment. That change, the statement says, would make Seward a “competitive community in the hiring landscape of Alaska.”

Though the title of the resolution describes a “classification and compensation study,” Sorensen said that title is inaccurate, as only wages were explored. While compensation more broadly can be explored later, Sorensen said the time is now to look at wages in “a black and white way,” because Seward’s wages haven’t remained competitive.

Patrick Messmer, a Seward police officer, spoke in favor of the wage increase.

“Someone said we have great jobs in Seward,” he said. “If we look at the pay and benefit package, we don’t. That’s why we’re losing employees … the workers can’t afford places to live.”

Matthew Susko, another Seward police officer, said that Seward police officers cannot afford houses in the city. He said that Seward officers are looking for other jobs because of that issue with affordability.

Nancy Hulbert, in Seward’s finance department, said she’s seen her employees lose their homes, moving into RVs or “yurts.”

“The reality is that we’re talking about essential services that the city provides,” Hulbert said. “We really do have a real crisis here in terms of staffing and in terms of being able to retain people.”

Sorensen asked the council to postpone the resolution so that her office could ensure that the city can afford the raises without “stretching ourself to any limits” when calculating a budget without the proposed bed tax increase. The postponement was approved unanimously.

A new agreement

Another resolution considered by the council during the Nov. 12 meeting would authorize a new agreement with the Boys & Girls Clubs of the Kenai Peninsula and Seward, reducing the funding provided by Seward from $185,000 to $170,000 and eliminating a separate $25,000 scholarship. That reduced funding comes as “an opportunity,” according to an agenda statement by Seward Director of Parks and Recreation Melanie Hauze, for the clubs to “refocus” on younger children. The clubs would, under the agreement, continue to support children aged 5 to 12, while teen services will instead be taken on by Seward Parks and Recreation.

Bailey Smith, a student who attends the boys and girls club, said that outdoor toys have been missing from the playground in recent years. Her mother, Christina, said she was hoping to see the new agreement postponed. She said that that Seward hasn’t indicated any financial need to reduce funds to the boys and girls club, or any dissatisfaction with the services being provided. She said she wanted a public discussion about what teen programming the city will provide.

Katrina Townsend said that the teen room at the boys and girls club is often closed, and that she’s excited to see Seward’s Parks and Recreation Department take on the responsibility, but that she wanted to see more information about how the transition would work and what opportunities would be available to youth in Seward.

The council did not act on the resolution on Nov. 12, instead choosing unanimously to postpone it.

“We need to hear from boys and girls club,” Seward Mayor Sue McClure said. “That’s the bottom line.”

Investing in fire safety

The only resolution supported by the council on Nov. 12 is one that would add a full-time paid firefighter/EMT to the Seward Fire Department.

An agenda statement by Fire Chief Clinton Crites says that the department’s call volume has increased over the past five years from an average of around 300 calls to 500 calls per year, “the new norm and only increasing.” The department’s workload, he writes, will only continue to grow as large projects like the new cruise ship facility get underway and increase Seward’s population.

Speaking to the council, Crites said he wasn’t asking for another firefighter — he said he wants two, citing Seward City Council meeting minutes from Aug. 15, 1960, where the need to hire two paid firefighters was discussed. He said his department is run only through tremendous volunteer effort, where firefighters and their spouses often respond to late-night calls without compensation.

Having paid staff to work day and night shifts, Crites said, could save lives.

“Seconds matter.”

Sorensen said that her office can explore a second resolution to add the second position at the Nov. 25 meeting, but encouraged the council to consider the first resolution.

Unanimously, the council approved the resolution.

The budget is set for public hearing again on Nov. 25, before final approval on Dec. 16.

A full recording of the Nov. 12 meeting and previous budget work sessions is available on YouTube at “City of Seward.”

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