The city of Kenai is preparing its fiscal year 2021 budget with several areas of economic strength but still will likely need to implement a tax increase or user fees to make up for the loss in state support for capital projects.
Kenai Mayor Brian Gabriel and City Manager Paul Ostrander gave a presentation on the city’s budget last week.
There were several bright spots. Sales tax revenue continues an upward trend. The city’s 3 percent tax rate generates about $244 million, with sales tax revenue making up 54 percent of the city budget. That number should increase even more next year when online sales are taxed, as well.
Property tax is about 29 percent of the city’s budget, with a 4.35 mill rate. But money from the state has declined precipitously in recent years. Shared revenue, mostly in the form of fish taxes, is holding steady, while community revenue sharing funds have been considerably reduced and are likely to drop another $100,000 this year.
Ostrander says the biggest hit is in capital projects.