Soldotna talks budget, mill rate increase

Soldotna City Council members have begun to weigh their options for balancing the city’s budget in light of falling revenue.

City Manager Mark Dixson and Finance Director Melanie Imholte took council members and Mayor Pete Sprague through their proposed Fiscal Year 2017 budget during a work session Tuesday, which includes a mill rate increase from 0.5 to 2 mills. If the council passes the budget without any changes, the city’s mill rate would quadruple but still leave Soldotna with a $900,000 deficit, Dixson said.

Soldotna had been projected to lose $1.2 million in revenue due to the loss of its year-round sales tax on nonprepared food items. The city’s first-quarter payment came in $488,000 lower this year, Dixson said after the work session.

“(The) philosophy going into this year’s budget was pretty much, ‘Stay the course,’” he said. “No major changes in our services to the public and no major staffing changes.”

Soldotna’s operating revenues are projected to be nearly $11.7 million, down about 10 percent from last fiscal year. The city’s total expenditures are also projected to have decreased to almost $12.3 million, down about 5 percent from last year.

Dixson said he would rather reach into the city’s reserves while it is going through a period of economic downturn than cut the budget more deeply or “push the panic button.”

“We have plenty of money in reserves and the reason that we have money in reserve is so that if we do have a dip in our sales tax, then we can weather the storm without pulling back,” he said. “We’re not giving businesses and residents a reason to leave — we’re really trying to give them reasons why they should continue to stay here.”

Council members Tim Cashman, Keith Baxter and Paul Whitney said they would not be comfortable raising the city’s mill rate to 2 mills. Whitney said he thinks the budget can be trimmed further.

“I’m not totally convinced we’ve cut enough out of the budget as it stands right now,” he said. “I don’t like to nitpick, and go through the budget line by line and say, ‘Cut here, cut there.’ I think it’s something that the administration should be doing, take a look at some of these things in there that maybe we really don’t need to be involved in anymore.”

Dixson responded that he and Imholte had done plenty of trimming at the department head level and that there is little wiggle room left without moving on to cutting entire positions. He said he is open to council suggestions on where else to cut, though.

“We didn’t present a fluff budget so that we could negotiate,” Dixson said.

Another major option administrators and council members are keeping in mind to help offset lower revenue is the possibility of Soldotna becoming a home-rule city. Council members suggested holding another work session before they finalize the budget and after the May 10 special election in which voters will decide whether to establish a seven-member commission to form a charter for the city. If Soldotna was a home-rule city, it would have the power to set its own tax rates, including a year-round sales tax on nonprepared food items.

The council members agreed that knowing the outcome of that vote could change the way they think about their options going forward in terms of the budget.

“We could be more in control of what our revenues are, and what our revenue stream is whether the commission and the public decides, you know, this percentage is going to be sales tax, and this percentage is going to be real property,” Dixson said of home rule. “Right now … we’re at the bottom of the food chain. The federal government is pushing down on the state, the state’s pushing down on the borough, the borough’s pushing on us, and being a first-class city, we’re fighting this battle with our hands tied behind our backs.”

The city is looking into annexation as another possible way to make up for lost revenue. Dixson said that while annexing neighborhoods is not the goal, annexing areas with businesses would be helpful to the city in terms of collecting sales tax revenue from businesses that are setting up on Soldotna’s borders.

At the work session, council members Linda Murphy and Regina Daniels said they would be comfortable raising the city’s mill rate to 2 mills.

“I don’t want at this time to go over that, because, depending on what happens with next week’s election, we may be in better shape next year or a year from now than we are right now,” Murphy said.

Baxter asked whether pursuing increasing the city’s sales tax to 4 percent as a way to offset revenue lost when the year-round tax went away has been considered by administrators. Dixson said, in his mind, that course of action would come in as “option C,” behind pursuing home-rule status and behind annexation.

Administrators will introduce the FY 2017 budget with any changes to the city council at its May 25 meeting, and council members will vote on the budget June 8.

Reach Megan Pacer at

More in News

In this Aug. 26, 2020, file photo, U.S. Rep. Don Young, an Alaska Republican, speaks during a ceremony in Anchorage, Alaska. The longest-serving Republican in the U.S. House is appearing in a new round of ads urging Alaskans to get vaccinated against COVID-19. Ads featuring Young are being paid for by the Conquer COVID Coalition, Young spokesperson Zack Brown said by email Monday, Oct. 18, 2021. (AP Photo/Mark Thiessen, File)
Young urges vaccination in new ads

Young, 88, “believes the vaccines are safe, effective and can help save lives.”

A portable sign on the Sterling Highway advertises a Pfizer COVID-19 vaccinaton booster clinic held 9 a.m. to 1 p.m. Friday, Oct. 15, 2021, at Homer High School in Homer, Alaska. (Photo by Michael Armstrong/Homer News)
What you need to know about boosters

COVID-19 vaccine eligibility explained

Damage in a corner on the inside of the middle and high school building of Kachemak Selo School Nov. 12, 2019, in Kachemak Selo, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)
Repair costs rise as school facilities deteriorate

About $420 million worth of maintenance is needed at Kenai Peninsula Borough School District buildings.

Department of Public Safety Commissioner James Cockrell (center) presents Wildlife Trooper Laura Reid (left) with a Life-Saving Award for her efforts in rescuing a child from the Kenai River offshore of North Kenai Beach this summer, during a ceremony held by Gov. Mike Dunleavy on Oct. 13, 2021. Reid and Kenai River dipnetter Antoine Aridou (far right) rescued the 12-year-old on July 29, 2021. (Photo provided by the Office of the Governor)
Governor recognizes dipnetter, trooper for summer rescue

Wildlife Trooper Laura Reid received a Life-Saving Award and Antoine Aridou received a Governor’s Commendation.

COVID-19 (Image courtesy CDC)
State reports 3 more COVID deaths, more than 900 cases

The newly reported deaths push Alaska’s total to 594 COVID fatalities since the beginning of the pandemic.

In this July 1908 photograph provided by the U.S. Coast Guard Historian’s Office, the U.S. Revenue Cutter Bear sits at anchor while on Bering Sea Patrol off Alaska. The wreckage of the storied vessel, that served in two World Wars and patrolled frigid Arctic waters for decades, has been found, the Coast Guard said Tuesday, Oct. 12, 2021. (U.S. Coast Guard Historian’s Office via AP)
Coast Guard: Wreck found in Atlantic is storied cutter Bear

The ship performed patrols in waters off Alaska for decades.

The Federal Aviation Administration released an initiative to improve flight safety in Alaska for all aviation on Oct. 14, 2021. (Peter Segall / Juneau Empire File)
FAA releases Alaska aviation safety initiatives

The recommendations, covering five areas, range from improvements in hardware to data-gathering.

Most Read