Soldotna City Council members debated the best remedies to the city’s dip in revenue before passing a $12.2 million budget at their Wednesday meeting.

The city will operate with a $10.1 million general fund and a $1.5 million utility fund in its Fiscal Year 2017 budget. The council also passed a resolution to levy property taxes at a rate of .5 mills.

The most contested issue at the meeting was whether to raise the city’s mill rate to 2.0, as administrators suggested, or keep it status quo. City Manager Mark Dixson said that even quadrupling the mill rate wouldn’t get Soldotna completely out of the hole created in part by the loss of year-round sales tax revenue on nonprepared foods and by the loss of state funding. He also pointed out that city residents paid 1.6 mills in property taxes just a few years ago, so raising it to 2.0 wasn’t out of the question.

Council member Keith Baxter moved to amend the property tax resolution to keep the mill rate at .5, saying that Soldotna doesn’t “make a habit of running deficits” and that its reserves are sufficient to compensate for loss of revenue without hiking the mill rate.

“I appreciate the mill rate increase that was suggested by the administration and I can understand why they don’t want to draw down on our general fund,” Baxter said. “Because we’re considering the annexation of land that would affect our property tax structure, because we are considering home rule which may affect our tax structure, because the borough is addressing potential changes to taxation that would affect our successive sales tax revenues in the city, and because I’m optimistic sales tax projections … I’m making this amendment. I don’t think it’s time to toy with the mill rate based on, you know, one or two quarters of loss from the seasonal nonprepared food tax.”

Baxter said the council can make a better decision about property taxes after a full year of data is available. Council members Paul Whitney and Tim Cashman voted with Baxter in favor of his amendment.

“Though I don’t necessarily like to be in a deficit position in the budget, I think … this is one time that we should take a look at it and let it go for a year and see what happens,” Whitney said.

Council members Linda Murphy, Regina Daniels and Steve Manley voted against it, which caused Mayor Pete Sprague to break the tie with a yes vote.

Murphy said she couldn’t support Baxter’s amendment because it would be irresponsible to draw down the city’s fund balance low enough to cover the deficit that would be left without the mill rate increase.

“First, I feel like by kicking the can down the road we’re doing what we are all complaining that the Legislature’s doing with the state’s budget,” she said.

In his first full meeting since being chosen to fill the council’s empty seat, Manley introduced an amendment to have the mill rates meet in the middle, at 1.0, saying a more measured approach to raising property taxes is prudent.

Since his motion did not get a second, Baxter’s original amendment was the one eventually approved.

The council also voted not to include funding for the Central Area Rural Transit System, or CARTS, which the organization had requested. In her pitch to the council, CARTS Executive Director Jennifer Beckmann said organizations that provide transportation are all working toward the same goal.

“They may be different sets of populations, but funding transportation is good for our community, and one of the things that’s happening with budgets tightening whether it be at the local level, the state level, funding from the federal level … what it does is it sets up competition between agencies that are trying to really accomplish the same goal,” she said.

Joyanna Geisler, executive director of the Independent Living Center, also made her case to the council members before they voted on the budget, asking for $10,000 in funding for the center’s taxi voucher program that subsidizes rides for those with barriers to transportation, which did not receive the state funds to run this year. The council voted not to include this funding.

Geisler appealed to the Kenai Peninsula Borough Assembly when it approved the borough budget Tuesday, and did not receive funding there either. She plans to repeat the process in Homer, Kenai and Seward, she said, and will go to the Alaska Mental Health Trust and smaller community-level sources as well.

Geisler said she would use any funds she gets to run the program in a limited capacity.

“If we get a big chunk, then we can — that will carry us through part of the year or it’s also sometimes enticing for the smaller fund requests,” Geisler said.

It took $84,000 to run the program in Kenai and Soldotna alone, she said. CARTS did not get the funds it asked the city of Kenai and the borough for either.

Council members will participate in a work session at 4:45 p.m. Wednesday, June 22 at Soldotna City Hall to go over the results of an annexation study the city had conducted by Northern Economics, a consulting firm based in Anchorage.

Reach Megan Pacer at megan.pacer@peninsulaclarion.com.