Approved Borough Budget Brings Cuts, No New Taxes

Jun 9, 2017


The Kenai Peninsula Borough Assembly approved a new budget for the upcoming fiscal year. Tuesday night’s vote came in front of a backdrop of drooping state finances and some uncertainty about the future of the peninsula’s economy.


That uncertainty was cause for reluctance to find new revenues by way of taxes. Assembly Member Dale Bagely’s proposal to roll back a sales tax exemption on nonprepared food items from nine months to six found much the same opposition it did when he introduced a similar measure a few years ago.


“I know that when I tried this before there was some conflicting options on other ideas that other assembly members and the mayor had to try to either cut funding or find some revenue to raise, so I guess I just wanted to give this one more try."


That measure failed. There simply was not a big appetite for anything looking like a tax hike, be it a scaling back of tax exemptions or an actual increase the mill rate for property owners, and that’s something Borough Mayor Mike Navarre took some issue with.


This is his last go-round putting together a budget, and he expressed some disappointment that the sssembly chose to draw from savings next year rather than find new revenues.


“The budget increase in the Kenai Peninsula Borough since 2009, including the increase to education, has averaged 2 percent. Two percent. And I get it, that the economy is contracting. There's no good time to raise taxes. But when's the last time you heard when the economy was good that we should raise taxes and put money back into the fund balance in order to make sure that when the economy turns down, we'll have adequate funds in our fund balance to make sure we can ride through an economic downturn? Because it's not a good time to raise taxes when the economy's good and it's not a good time to raise taxes when the economy's bad."


With no appetite to raise revenues to close a roughly $4 million budget gap, the assembly looked toward cuts. And as it has many times in the past, it looked at so-called nondepartmental funding — those line items that don’t fall specifically within the borough government, but provide borough services nonetheless.


The Central Area Rural Transit System, or CARTS, was voted completely out of the budget. The $25,000 that had been proposed for CARTS was actually only half of what was funded just a couple years ago. Much of that money is used to leverage other grants to further fund the organization, but Assembly Member Stan Welles says that whether the money comes from the borough or Uncle Sam, it’s not a good use of tax dollars.


“We can give money for leveraging federal dollars in many useful directions, but all of those dollars, both those used for leverage and the leveraged, all come from the pockets of taxpayers. The taxpayer takes money out of the left pocket to pay the borough taxes, while at the same time taking money out of the right pocket to pay the federal taxes. Both entities are broke and hurting, not to mention the taxpayer who may well have either lost his or her job or will. I think we, as a borough, need to reduce the number of pies we have our fingers in."


While CARTS was totally zeroed out, other areas saw reductions — the Small Business Development Center was cut from $100,000 to $84,000. When all was said and done, the assembly signed off on a budget that includes $83 million in the general fund.