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Borough annual budget makes its debut

Posted: May 7, 2014 - 9:41pm  |  Updated: May 7, 2014 - 9:51pm

In its proposed fiscal year 2015 annual budget the Kenai Peninsula Borough is facing a $2.9 million funding gap, largely due to an increase in property tax exemptions.

Craig Chapman, borough director of finance introduced Assembly members to the annual budget during a finance committee meeting on Tuesday and said voters increased property tax exemptions from $20,000 to $50,000 in October 2013, which impacts the budget by $2.4 million.

While voters chose to increase property tax exemption, revenue from the tax is projected to be up slightly from last year.

Even with the decrease in revenues it will generate, property taxes is expected to be the biggest contributor to the general fund at $33 million.

Chapman said a decrease projected for taxable assessed values for real property is offset by an increase in assessed values oil and gas.

More oil and gas exploration in the borough has lead to an increase in assessed values from $699 million in 2012 to $1.142 billion in 2015.

The borough projects collecting $73 million total for its general fund budget — slightly more than FY2014.

Sales tax is also expected to bring in more general fund money than FY2014 at an estimated $30.56 million.

“Of course, with closing the river to (early run king salmon fishing), we don’t expect our increase to be quite as large as we originally forecasted, but we still see an increase overall,” Chapman said.

He said about 25 percent of all sales tax revenue is tourist related.

Total expenditures are up $1 million from last year. Contributing factors are school funding and personnel changes, according to the draft budget.

The borough estimates to spend about $74.4 million of its general fund.

Kenai Peninsula Borough School District is the largest fund expenditure at $49 million, which includes operations, capital projects and debt. It makes up about 66 percent of general fund expenditures.

The draft was finalized prior to the end of the Legislative session, so projected funding for education is based on last year’s numbers.

The Legislature passed House Bill 278 with increases to the Base Student Allocation formula well as one-time funding appropriations over the next three years. Both funding methods will be factored in to calculate local government contributions.

Borough Mayor Mike Navarre said the administration is going to work with KPBSD administrators to determine funding levels. He said the additional state funding will help significantly in closing the district’s deficit, so the borough is hopeful it won’t have to increase its general fund appropriation this fiscal year.

Last year the borough provided $43.5 million based on the state’s allocation.

After schools, the solid waste program is the next most expensive program the borough funds. General fund support is projected at nearly $6.5 million for FY2015, which has been decreasing annually since FY2011. Chapman said much of that decrease is due to waste from oil and gas activity.

The borough’s governmental funds are made up of the general fund, special revenue funds, debt service funds and capital project funds.

A public hearing on the budget is scheduled for June 3 at the next assembly meeting in Soldotna.

Kaylee Osowski can be reached at kaylee.osowski@peninsulaclarion.com.

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