The city of Kenai held a budget work session over the weekend to take a look at the proposed draft budget for next year.
Kenai’s proposed $28.1 million budget is roughly six percent bigger than last year’s. During a marathon, eight hour work session Saturday, city manager Paul Ostrander said much of that is attributable to things like pension and insurance increases, and some one-time capital outlays.
“Those five things don’t actually represent cash outflows. So including all those, if you look at the bottom line increase in the budget is actually just slightly over two percent rather than the six percent."
Those one-time expenditures include capital projects for congregate housing, like new sprinkler systems and a new boiler. There’s also a transfer to the senior citizen fund to make up for lost reimbursement from Medicaid programs. Ostrander says more than just the simple dollars and cents, he wants this budget to represent a different way to think about spending in the city.
“What we’re really focusing on is the why. Why we’re here every day, what we’re trying to accomplish as individual departments and what we’re trying to accomplish as a city. Every department has created a mission statement. A key part of that is we’ve created performance measures. And really, from our perspective, that’s what we should measure, is how we’re performing. We should know what we’re trying to do and we should have data that can show whether or not we’re doing our jobs.”
During the work session, finance director Terry Eubank went over some of the cost-drivers in the budget, namely health care. The city budgets under the assumption that insurance rates will inevitably go up, but Eubank says they’re continuously making tweeks to the city’s plan.
“Our operational budgets are planned to absorb a ten percent rate increase every year. Which, I don’t want to give anybody the impression I think that’s acceptable. It’s just absolutely crazy. But it’s just been reality. But, in order to achieve a 9.8 percent rate increase, if we want to keep the plan we have, it’s 14 percent. The minor tweek we’re looking at making, right now, our employee deductible is the same for in-network and out of network. It will have a higher deductible for out of network.”
The city’s insurance carrier, Premera, has a large network of providers, and Eubank says 95 percent of claims are handled in network, but it’s a start. Another tweek is requiring purchase of generic drugs covered by insurance when they’re available. Eubank says some employees may have to make that change.
“By and large, most of the drugs that employees are going to have to change, percentage-wise, are antihistamines that are available over the counter that are currently covered under our health care. That’s what we’re going to present to employees next week and that’s what we’re moving forward with.”
On the revenue side, income from sales tax is expected to go up next year, totally more than $7 million. Beyond 2019, sales tax revenue is projected to go up by 2.5% on a year over year basis. Property taxes are also up slightly, though there’s been no change in the mill rate. Assessed real property value totals $776 million. Oil and gas properties will bring in $45 million, with most of that coming from office space and production facilities.
Revenues from the personal use fishery fund are also up, to well over half a million dollars. Beginning this year, money coming in through the PU fishery fund will be transferred into the city’s general fund to cover expenses outside the fishery. The city council is scheduled to adopt the budget when it meets again on June 6th.