The city of Kenai will release its draft budget for the next fiscal year in a couple weeks. City manager Paul Ostrander spoke with KDLL about putting together a new budget amid all the uncertainty with the state budget. Last year’s general fund appropriations totaled a little more than $16 million with all expenditures coming in at just over $28 million and Ostrander expects a modest increase in the 2020 budget of less than one percent.
Shaylon Cochran: From an administration standpoint, what are some of the big things you’re paying attention to as you’re developing a budget for the city of Kenai for fiscal year 2020?
Paul Ostrander: “We certainly are considering what’s going on at the state level. There was some early legislation, primarily with oil and gas tax and fisheries tax that we certainly paid attention to. They seem to have lost traction at the state level and funding for both oil and gas and fisheries is going to remain pretty steady for next year, so while we did pay attention to what’s going on with the state, we really looked internally and I will tell you, the city of Kenai is on really solid financial ground right now. (We’ve had) really prudent fiscal planning for many, many years and we’re seeing the results of that.
When we looked at preparing the budget, what we really looked at (was) a couple things; from the operational side of things, what we wanted to focus on was making sure that we could continue to fund our operations with existing revenues. So, we didn’t want to look at raising taxes, either property or sales tax. So we really tried to make sure that we sized our operational budget in such a way that we could cover it with existing revenues, and we accomplished that.
On the capital side, it was a little bit different in that we have seen a trend over the last four years where capital funding from the state has gone from...well, five years ago the city received over $5 million in capital funding. In the last three years, we’ve received zero and we don’t anticipate receiving any this year. There’s a slight possibility the state might actually provide a little bit of capital funding, but at this time, we are projecting zero for capital funding.
So when we looked at the capital side, we realized that we had to start putting into place a plan where we could start funding this capital from city revenues. This year, we did actually provide more capital funding than we have in the past, almost to the tune of $1.4 million, but the focus for capital was on maintaining our existing infrastructure. Really, we see that as our primary responsibility is making sure we maintain what we have. And quite frankly, that hasn’t been a focus, necessarily, in the past. But it’s important we focus on maintaining what we have.
Growing our infrastructure? Maybe in a different environment that might be something that we look at but right now, it’s really about focusing on maintaining our existing infrastructure. One of our big focuses in this budget is on our water and sewer side. There have been some things that have been deferred for a number of years and we’re beginning to check those off the list so we can make sure that we maintain. It’s critical for the residents of the city that that continues to run well so we’ve really put a lot of focus on that this year.”
SC: What are you seeing as the proposal coming out? Are we looking at cuts at the city level? You mentioned that you’re trying to do everything without any tax increases, so are we looking at major cuts to get there?
PO: “No, not major cuts to get there. Actually, our sales tax numbers have been very healthy over the last year. We’re projecting that by the end of (FY) 19, we’re going to see a six and a half percent increase in sales tax revenues year over year. So that’s a real benefit.
What we did do when we put the budget together this year, I actually went out to every department head and asked them for a significantly reduced budget. But I also asked them to provide a narrative. So, if we cut to this point, what does it look like to residents of the city as far as how does that impact our police services or fire services or parks and rec? I was provided that information from every department and then what we did was look at each of those and we weighed the benefit of the cost savings associated with those cuts versus what it looked like from a resident’s perspective; how would things look differently for them? So some of those we incorporated in. Many of them, we felt the impacts to services outweighed the benefit of the cost savings.
We did look to put the budget together from a very conservative perspective. We did actually manage to cut a significant amount from our operational budget, however, when you consider the increasing costs in health care and the inherent increases that you’re going to see from the personnel perspective, we do see a slight increase year over year for this budget. But the reality is, it’s less than a percent increase and when you consider that our health care costs alone were up over ten percent, I think we did a really good job of maintaining level of spending as much as possible, even with those increased pressures that we see as far as personnel costs.”