Kenai Peninsula Borough Mayor John Williams has proposed a cut in the property tax levy of one full mill as part of his fiscal year 2008 borough spending package. Williams introduced the FY 2008 budget ordinance at Tuesday's meeting of the Kenai Peninsula Borough Assembly. Public hearings have been set for May 1, May 15 and June 5. Assembly work sessions on the budget, which are open to the public, are scheduled for May 1, 14 and 15.

Ordinance 2007-19 would appropriate a total of $62.98 million, including $14.67 million for general government operations and $37.7 million for schools, and would establish spending levels for various other accounts, including the borough's service areas and special funds, debt payments, and internal funds covering insurance and litigation, health insurance reserves, and equipment replacement.

During a short presentation, Finance Director Craig Chapman noted several budget goals set by the administration, including the highest affordable level of funding for schools, a high-quality maintenance program, support for the needs of service areas, providing borough departments with sufficient resources, a stable tax policy and stabilizing the borough's financial condition.

Earlier this month, the assembly voted to boost the borough's sales tax to 3 percent effective on Jan. 1, 2008. Williams had pushed for the increase as part of a broader tax policy that included lowering the property tax. Earlier this year, the administration proposed making the 1-mill cut in two steps over the next two budgets.

However, the fund balance projected to be available at the end of the current budget, and other factors, led the administration to propose making the full 1-mill cut effective July 1.

Borough budgets aim to maintain the annual fund balance roughly between $11 million and $22 million, a range considered by the borough's financial advisers to meet the borough's fiduciary responsibility. When the FY 2007 budget was adopted, the fund balance was predicted to fall to around $12.4 million by the end of the fiscal year.

However, higher property tax revenue spawned by higher property values (boroughwide, the total property value has jumped from $4.83 billion to $5.27 billion), as well as strong tax returns from sales, and state appropriations to municipalities enabled revisions of the predicted fund balance to $17.8 million.

Estimates for FY 2008 through FY 2011 show much healthier fund balances between $15.9 million and $17.7 million, Chapman reported.

How borough finances actually play out could depend heavily on actions taken by the Alaska Legislature, and how the state and local governments come to grips with the debt to the public employee and teacher retirement systems, PERS and TRS. Future budget issues, Chapman said, would continue to include adequate local funding for education and maintaining a stable tax policy, along with reacting to state fiscal policy decisions.

The proposed budgets for most of the borough's service areas include spending increases, but only a few would see increases in their property tax mill rates. Here is a look at the service areas and special funds, their proposed budgets, and their proposed mill rates. Mill rate changes are indicated.

• Nikiski Fire SA, $4.09 million, 3 mills;

• Bear Creek Fire SA, $262,808, 2.25 mills;

• Anchor Point Fire and Medical SA, $380,383, 2 mills;

• Central Emergency SA, $6.01 million, 2.55 mills (increase of .2 mills);

• Kachemak Emergency SA, $530,836, 1.75 mills;

• Lowell Point Emergency SA, $11,889, 1.75 mills;

• Central Peninsula Emergency Medical SA, $9,400, 1 mill (budget revenues are transferred to CES);

• North Peninsula Recreation SA, $1.46 million, 1 mill;

• Road Service Area, $5.06 million, 1.3 mills (reduction of .10 mills);

• Post Secondary Education, $581,400, .10 mills;

• Land Trust Fund, $1.37 million, (no mill rate);

• Kenai River Center, $598,053, (no mill rate);

• Seward-Bear Creek Flood SA, $219,152, .50 mills;

• Disaster Relief Fund, $60,565, (no mill rate);

• Nikiski Senior SA, $246,454, .20 mills;

• Solid Waste, $7.21 million, (funded by transfer from general fund);

• Central Peninsula Hospital SA, $10.17 million, 1 mill; and

• South Peninsula Hospital SA, $2.17 million, 1.75 mills.

A resolution setting the tax rates is to be introduced on May 15.

The new budget proposes funding schools to the cap set by state and federal law, an amount equal to just over $37.7 million. That is an increase of almost $951,000 over last years original budget, but a decrease of $232,801 from the recently amended FY 2007 budget.

School funding represented 65.6 percent of overall spending during the current fiscal year, Chapman reported.

As proposed, FY 2008 budget would appropriate a total of $62.98 million, an increase of about $4.24 million over the current year. Chapman said Wednesday that despite the overall budget growth, the new budget nearly maintains the status quo.

An increase of $985,950 in PERS obligations represents a good portion of the growth, he said, but indications are the state may come through with about $925,000 to cover the greater portion of that increase.

Also contributing to the increase is an increase of $1.04 million to Solid Waste and other smaller appropriations. The new budget anticipates adding the equivalent of 3.2 full-time employees, including 1.5 FTE in the Office of Emergency Management, 1 FTE to handle the workload associated with tax exemptions, and .2 FTE for administrative support.

Currently, the borough employs the equivalent of 113.1 full-time workers. The new budget would push that to 116.3 FTE. According to the borough's Human Resources Department, borough employees fill a total of 276 full- and part-time positions that get full benefits. A few others, about six temporaries working for the Spruce Bark Beetle mitigation program, do not receive the full borough benefit package.

Hal Spence is a reporter for the Peninsula Clarion