The Kenai Peninsula Borough Assembly introduced its $73.2 million fiscal year 2014 budget on May 7.
The budget is contained in Ordinance 2013-19 and, if approved after a June 4 public hearing, would take effect July 1. The budget calls for $73.2 million in expenditures, an overall increase of $301,679 from this year’s budget, and $71.9 million in revenues.
Kenai Peninsula Borough Mayor Mike Navarre said the budget’s bottom line was helped by contracting out operations of the solid waste transfer site in Homer, keeping new positions to a minimum and having several long-time, well-paid employees retire. However, the borough also had to cope with increases in expenditures in personnel and health care and decreases in revenues from state and federal sources.
“We’ve tried to maintain a fairly status quo budget, so I think it is due to the instructions that we gave to the departments and the service areas going into it,” he said. “(That was), ‘Hey, we’re going to scrutinize the request for increases in the budget, so look at areas where you can do things differently, where you can find economies and efficiencies and we’d like to see those.”
In the current fiscal year budget, the borough allocated $72.9 million in expenditures, a number reduced from Navarre’s originally proposed $73.1 million budget.
In total, the proposed 2014 budget allocates $47.69 million for the Kenai Peninsula Borough School District, which includes operations, debt service and capital projects. The budget also would fund solid waste, the borough’s second largest expense, at $6.9 million, a decrease from last year’s $8 million.
This year the school district requested $44.5 million for operations, which is $1.5 million more than its current $43 million operating budget.
Last year the borough pulled $500,000 from its budget that would have gone to the school district. This year, Navarre said he added the same amount of money back into the budget to boost the school district’s funding to $43.5 million for operations, leaving the district with a $1 million shortfall.
In a finance committee meeting last week, Navarre said the Alaska State Legislature gave the school district an additional $1.4 million in funding, but earmarked it for safety enhancements.
“Basically what we tried to do was to balance between what it looked like they would be pulling out of their fund balance, and what we would be pulling out of our fund balance,” Navarre said. “We’re taking an equal hit in terms of the expenditure for education, but at the same time meeting their requested need for education.”
The budget calls for $71.9 million in revenues leaving a shortfall of $1.26 million. However, because of a funding lapse of about $758,220, only about $500,000 will need to be pulled from the general fund, the borough’s savings account. The fund balance would rest at $20.4 million with this year’s withdrawal.
Navarre said it is a priority of his to reduce the draw down of the general fund. He said he is comfortable with the level the budget leaves the general fund.
“I think you need to maintain a fairly healthy fund balance,” he said. “… The fund balance generates revenues through investment earnings, so it is also a revenue stream. So if you reduce fund balance, you have to get increases in revenue somewhere else, like taxes.”
The borough is budgeting for $29.9 million in sales tax revenue and $33 million in property tax revenue. Total projected revenues are up about $500,000 compared to the original 2013 budget, but up only about $186,000 when compared to the 2013 year end forecast.
Reductions in federal and state funding for 2014 total $1.6 million, which represent a decrease of $896,000 from revenue sharing programs and about $600,000 from forestry receipts and the payment in lieu of taxes program.
The preliminary total taxable assessed value for the borough in fiscal year 2014 is $6.9 billion, a total increase of 3.9 percent. Without increases in oil and gas values, the increase is only 1.5 percent.
Total real property was assessed in the borough at $5.7 billion; personal at $249 million; oil and gas at $987 million. Oil and gas valuations, which are assessed by the state, are up significantly — an increase of $288 million since fiscal year 2012.
The budget would fund $17.3 million in general government operations, an increase from this year’s $16.8 million. The budget calls for a staff increase of 1.7 full time equivalent positions and funds non-departmental agencies at about $2 million, which Navarre said was “status quo.”
“All of them got the same amount they got last year,” Navarre said of the non-departmental agencies, adding that Kenai Peninsula College saw a slight increase based on the equivalent of one-tenth of a mill guide voters established for its funding.
Navarre said he had more requests to add staff, but the new position for the purchasing department has secondary benefits.
“We think there are some economies and some savings that can be achieved by better scrutiny on some of the projects, how we do our contracting and how we follow up with the service areas,” he said. “We think we’ll avoid costs and actually save money over time by having that additional person there.”
Navarre said increases in health care are expected to be less than increases in previous years. Health care costs are projected to go up 3 percent across all borough employees, an increase of $190,744 compared to 2013’s proposed budget.
“Hopefully it’s starting to be a trend, but it may just be an anomaly,” he said. “We’ve had big increases over the last several years. This year by comparison it is not a big increase.”