The things certain in life, as the saying goes, are death and taxes. And with the Kenai Peninsula Borough Assembly, don’t even count on taxes.
At its Tuesday meeting, the assembly spent a great deal of time trying to figure out how to cover a $4 million hole in its budget for the coming fiscal year, which begins July 1. Much of the discussion revolves around how the borough government will choose to fund the school district, which is by far the largest portion of the borough’s budget. The borough administration has proposed funding the school district at the same level as the current year, at about $49 million. The district, seeing increasing costs and anticipating flat funding from the state, is asking for the borough to kick in a few million more. Should borough funding stay flat, school district administrators are preparing for what they are calling “Scenario Two,” which involves staffing cuts and increased class sizes across the district.
The borough administration and assembly have been looking at ways to cover the deficit for several years, with a variety of tax proposals, including an increase in the property tax mill rate, changes in the senior property tax exemption, an increase in the per-transaction cap on taxable sales, a bed tax, and a sales tax increase, among other measures.
Yet with all the discussion of potential new revenue, none of those measures have come to fruition. And if the assembly continues to look at tax increases that require voter approval, they’re not likely to pass anytime soon, either.
Last Tuesday, the assembly for the second time rejected putting the bed tax measure on the fall ballot. Last fall, voters shot down a sales tax cap increase. A year ago, the assembly nixed a mill rate increase. In 2016, voters said no to a sales tax cap increase and a reduction in the senior property tax exemption.
With the bed tax off the table, the assembly will now consider increasing the borough sales tax from 3 to 3.5 percent. Sales tax collected by the borough is dedicated to education funding.
Assembly member Dale Bagley summed it up this way: “It seems like there’s the will of the assembly to do some kind of tax increase but we can’t collectively seem to agree on any one course, which is unfortunate.”
In fact, the only agreement seems to be that the borough cannot continue to draw from its fund balance to pay for borough services, which includes public schools.
We hope members of the borough assembly can get themselves on the same page when it comes to the borough’s revenue picture. If school district funding is in fact a priority, then figuring out how to pay for it also must be a priority. That may require enacting a measure that doesn’t need voter approval, such as the mill rate increase.
Otherwise, the school district needs to continue to prepare for its worst-case scenario, which requires pink slips to go out next month. The clock is ticking.
