The Kenai Peninsula Borough’s budget will take a hit next year due to the global pandemic.
The proposed budget to be discussed at Tuesday’s borough assembly meeting estimates sales tax revenues to be nearly $5 million less than what the department originally budgeted, which was around $27 million. The $4.8 million projected loss of sales tax revenue is a 15% decrease from fiscal year 2020.
The budget will fund the borough’s annual fiscal year, running from July 1 until June 30 2021. Borough Mayor Charlie Pierce has submitted his proposed budget to the assembly, which appropriates $82,824,710 to the borough general fund. The budget funds each of the borough’s departments and assigns contributions to the Kenai Peninsula Borough School District.
A budget presentation included with the proposed budget document shows how other parts of the local economy will be impacted by the COVID-19 pandemic. The presentation says borough residents can expect to see decreasing assessed values, higher delinquency rates for property and sales taxes, high unemployment, low interest rates, low oil prices and higher mill rates or reduced services.
In the proposed budget document, the borough finance department is also projecting a $4.5 million decrease in property taxes, which is anticipated to reduce property tax collections and lower oil and gas property values. Since 2015, oil and gas assessed property has increased 31%, the document said.
The borough’s total budget includes $71,162,283 in revenues for the general fund, which is made up of $38,708,906 in property tax revenue, $27,431,594 in sales tax revenue, $705,000 in state revenue, $3,740,000 in federal revenue and $576,783 in “other revenues and financing sources.” Expenditures for FY 2021 are expected to exceed those revenues by $11,569,299. Compared to the FY 2020 budget, overall expenditures were reduced by $2,705,717.
The proposed budget includes $50 million for the school district, which is about $2 million less than the district received last year. The max amount the borough can contribute to the district is $52,776,437. The district will provide at least $45 million to the district, the assembly decided at their April 21 meeting.
In his proposed budget document, Pierce said basic services will be maintained at current levels.
Gov. Mike Dunleavy’s most recent vetoes of the community assistance funding and school bond debt reimbursement have been noted as “significant factors in the development” of the proposed budget, the document said. The community assistance veto is a reduction of $830,672 the borough was anticipating. Dunleavy’s veto of the state aid for school construction also reduces $2.6 million from the borough, which is proposed to be made up for by fund balance. Total state revenues are expected to decrease by $330,672, or 32% from FY 2020.
The proposed budget includes some funds to address maintenance and capital facility needs, including $1.25 million to the school facilities project fund to address school buildings.
The proposed budget increases funds for the borough’s solid waste program, due to the department’s ongoing maintenance and contractual obligations and storm water requirements, the document said. The solid waste funds are proposed at $7,962,312, an increase of $164,342 from FY 2020.
Service area budgets are comparable to their FY 2020 budgets, the document said.
The assembly will go through the budget line items over the next month to make adjustments and amendments, before the finalized budget is approved in June. The public will have a chance to speak on the proposed budget at the May 19 and June 2 meetings.