For the current year, the borough assembly passed a budget that spends $4.15 million more than it generates. Given the current savings account ending the year with $18 million, if this trend continues the savings account will be empty in less than 5 years. Clearly the borough has a money problem. After you take out all of the service areas and the transfers to education, the total budget for the general fund is only $18.15 million. This puts the deficit at around 22% for this year.
I don’t believe that we are going to cut our way out of this problem. Finding 22% to cut would be impossible unless entire departments are eliminated. While I agree that this is a possible solution, the problem is deciding which department needs to go. If we eliminate the landfill, which is the largest expense after education, people will be dumping trash all over the place. If we eliminate senior services then the seniors will be upset. Many of our departments are mandated by state law, such as planning and assessing. The only solution that I see is a moderate approach of reducing costs while also increasing revenue. Below I outline my ideas on reducing costs.
For the 2018 budget, $135,272 was budgeted to pay for health insurance for members of the assembly. When this policy was first implemented, health insurance was only a few thousand dollars per assembly member. Now that it has ballooned to around $15,000 per assembly member this benefit needs to be eliminated.
The borough contains a number of service areas such as Nikiski Fire, CES, the Road Service Area, etc. Up until 2010 all service areas were charged an administrative fee for the services they received such as human resources, information technology, finance, legal, risk management, and more. In 2010 a reduction to the administrative fee in the amount of approximately $1,000,000 was implemented. A note in that year’s budget indicated that because of revenue sharing from the state, the administrative fee would be eliminated. In the years since 2010 revenue sharing has dropped considerably, and will likely be completely gone in a few years. It is time for the administrative fee to come back. In a year when the general fund has a $4,152,000 deficit, Nikiski Fire and CES both had a reduction in their mil rate. This is because the general fund is subsidizing these service areas.
There has been a lot of discussion recently about the agencies that receive borough funding, including the Kenai Peninsula Tourism Marketing Council (KPTMC), Kenai Peninsula Economic Development District (KPEDD), and the Small Business Development Center (SBDC). The borough budgeted $465,000 in the FY18 to pay for these services, a 9.27% decrease from the prior year. As we go forward these services will once again be reevaluated. If a mil rate increase is needed to keep these programs alive I’m not sure the public will continue to support them.