The Kenai Peninsula Borough Assembly passed its $71 million budget Wednesday morning after several hours of public testimony and member discussion.
The assembly approved the budget on a 7-1 vote after being forced to adjourn at midnight on Tuesday with assembly vice president Charlie Pierce voting against it. Assembly member Ray Tauriainen was absent for the vote.
The assembly spent most of its time debating the fate of several non-departmental agencies like the Kenai Peninsula Tourism Marketing Council, Kenai Peninsula Economic Development District, Small Business Development Center, and the Central Area Rural Transit System.
Ultimately, funding for all was reinstated into the budget, although funding levels to two organizations were trimmed.
KPTMC received $300,000 in funding after an 8-1 vote and after numerous residents testified in favor of its funding and against it.
Assembly member Brent Johnson said he would support the organization only this year.
“Next year, there needs to be some funding mechanism in place,” he said. “I can’t continually support it. I see that the borough’s funds are sliding and I think we are not quite balancing the budget this year by doing this.”
Assembly member Linda Murphy said she fully supported KPTMC.
“This is certainly something that we can legally provide in support of tourism marketing and I think we have an obligation to provide that because when our economy and when our small businesses are healthy, we all benefit,” she said.
Tauriainen said he was going to suggest a reduction in funding for the organization, but couldn’t land on a number.
“The question is, is it spending, or is it stimulus?” he said. “And in this case, I believe it is stimulus. I don’t believe that every dollar we put into it we get over $4 back — in that case we should fund it $10 million … I don’t know what the right amount is. But, I think it is right to not cut it off at the knees and I think it does help our economy overall by funding it.”
EDD was proposed to receive $50,000 in funding, but Johnson made a motion to trim that amount to show he wanted all the non-departmentals to find other ways to fund themselves.
The motion passed, 5-4, cutting the funding by $10,000 to a total of $40,000.
“I think one way to get that message across very seriously is to start nicking them a little and that is the object of this one,” Johnson said.
CARTS was also proposed to receive $50,000, but assembly member Mako Haggerty made a motion to cut that funding in half.
The motion to fund the organization with $25,000 passed, 8-1.
“We have heard very little from them this year and I would like to see exactly how they are funded, where it is coming from, and where it is going to,” Haggerty said. “I’d like to, for lack of a better word, see them clean up their act.”
Funding for the Kenai Peninsula College, which totaled $657,791, was kept in the budget.
However, Johnson said he was “uncomfortable” with the college receiving the funding.
“I think they are doing a fabulous job, but I need to see a mechanism to pay for it,” he said.
Funding for the capital projects director position also remained in the budget. Borough Mayor David Carey previously recommended both items for deletion by the assembly to help achieve a balanced budget.
However, Carey recommended Tuesday the assembly not remove the capital projects director position, despite a possible savings of $44,321.
“We are going to come back and we are going to talk about some reorganization and some different things,” he said.
The assembly also withdrew a motion to increase revenue sharing from the state currently included in the capital budget in front of Gov. Sean Parnell.
Carey warned the assembly to not count their “chickens before they hatch.”
“It would seem to me premature to approve this before we have the money coming from the state and signed by the governor to add this money to our budget,” he said.
The assembly unanimously approved closing all borough landfill and transfer stations on Sundays between the start of October and the end of April for a cost savings of $127,956.
Assembly president Gary Knopp also made a motion to remove the funding for the special assistant to the mayor position — a decrease in salary of $82,745 per year.
“This is a position in the mayor’s department I feel has kind of run its course,” he said.
The assembly unanimously approved the measure.
Assembly member Hal Smalley also moved the assembly boost funding for the Kenai Peninsula Borough School District by $1 million to cover a rise in the transportation contract costs, but the measure failed, 2-7.
Assembly member Bill Smith said he thought the budget was passed in good condition and the expenses it called for — including dipping into the fund balance for about $2 million — was “healthy.”
“It is often said that it wasn’t balanced, but on the other hand, we are not spending money that we don’t have,” he said. “We are using some fund balance, but that is money that was collected from previous operations and I don’t consider fund balance to be a sacred number.”
Pierce disagreed, saying that by not having a balanced budget and dipping into the fund balance, the assembly was “postponing the inevitable.”
“I don’t think it is responsible for us to spend money out of the fund balance for the items we are proposing to spend it on,” he said. “If we continue to spend because we have money in the bank, at some point, we are going to have to raise those revenues again.”
Knopp’s feeling were somewhere in the middle — he said he thought Mayor Carey proposed a “great” budget.
“He kind of kept it status quo and I appreciate that although I know it was not easy to do that because of all of the uncontrollable costs this year,” he said.
But, he also said the assembly needs to start cutting costs or they would be forced to look at raising the mill rate or have substantial cuts.
“I do not think we should ever collect more revenue that we are needing to,” he said. “Obviously we have over the years. Obviously we have a pretty substantial fund balance and I agree that it is kind of a cushion to absorb some of the impacts. My concern is always the slide. Last year … we spent almost $5 million of fund balance. This year we are right at $2 million of fund balance. Next year, we’re right at my comfort level for minimum of $15 million (remaining) in fund balance. So you either raise revenue or you cut expenses.”