Soldotna talks budget, mill rate increase

Soldotna City Council members have begun to weigh their options for balancing the city’s budget in light of falling revenue.

City Manager Mark Dixson and Finance Director Melanie Imholte took council members and Mayor Pete Sprague through their proposed Fiscal Year 2017 budget during a work session Tuesday, which includes a mill rate increase from 0.5 to 2 mills. If the council passes the budget without any changes, the city’s mill rate would quadruple but still leave Soldotna with a $900,000 deficit, Dixson said.

Soldotna had been projected to lose $1.2 million in revenue due to the loss of its year-round sales tax on nonprepared food items. The city’s first-quarter payment came in $488,000 lower this year, Dixson said after the work session.

“(The) philosophy going into this year’s budget was pretty much, ‘Stay the course,’” he said. “No major changes in our services to the public and no major staffing changes.”

Soldotna’s operating revenues are projected to be nearly $11.7 million, down about 10 percent from last fiscal year. The city’s total expenditures are also projected to have decreased to almost $12.3 million, down about 5 percent from last year.

Dixson said he would rather reach into the city’s reserves while it is going through a period of economic downturn than cut the budget more deeply or “push the panic button.”

“We have plenty of money in reserves and the reason that we have money in reserve is so that if we do have a dip in our sales tax, then we can weather the storm without pulling back,” he said. “We’re not giving businesses and residents a reason to leave — we’re really trying to give them reasons why they should continue to stay here.”

Council members Tim Cashman, Keith Baxter and Paul Whitney said they would not be comfortable raising the city’s mill rate to 2 mills. Whitney said he thinks the budget can be trimmed further.

“I’m not totally convinced we’ve cut enough out of the budget as it stands right now,” he said. “I don’t like to nitpick, and go through the budget line by line and say, ‘Cut here, cut there.’ I think it’s something that the administration should be doing, take a look at some of these things in there that maybe we really don’t need to be involved in anymore.”

Dixson responded that he and Imholte had done plenty of trimming at the department head level and that there is little wiggle room left without moving on to cutting entire positions. He said he is open to council suggestions on where else to cut, though.

“We didn’t present a fluff budget so that we could negotiate,” Dixson said.

Another major option administrators and council members are keeping in mind to help offset lower revenue is the possibility of Soldotna becoming a home-rule city. Council members suggested holding another work session before they finalize the budget and after the May 10 special election in which voters will decide whether to establish a seven-member commission to form a charter for the city. If Soldotna was a home-rule city, it would have the power to set its own tax rates, including a year-round sales tax on nonprepared food items.

The council members agreed that knowing the outcome of that vote could change the way they think about their options going forward in terms of the budget.

“We could be more in control of what our revenues are, and what our revenue stream is whether the commission and the public decides, you know, this percentage is going to be sales tax, and this percentage is going to be real property,” Dixson said of home rule. “Right now … we’re at the bottom of the food chain. The federal government is pushing down on the state, the state’s pushing down on the borough, the borough’s pushing on us, and being a first-class city, we’re fighting this battle with our hands tied behind our backs.”

The city is looking into annexation as another possible way to make up for lost revenue. Dixson said that while annexing neighborhoods is not the goal, annexing areas with businesses would be helpful to the city in terms of collecting sales tax revenue from businesses that are setting up on Soldotna’s borders.

At the work session, council members Linda Murphy and Regina Daniels said they would be comfortable raising the city’s mill rate to 2 mills.

“I don’t want at this time to go over that, because, depending on what happens with next week’s election, we may be in better shape next year or a year from now than we are right now,” Murphy said.

Baxter asked whether pursuing increasing the city’s sales tax to 4 percent as a way to offset revenue lost when the year-round tax went away has been considered by administrators. Dixson said, in his mind, that course of action would come in as “option C,” behind pursuing home-rule status and behind annexation.

Administrators will introduce the FY 2017 budget with any changes to the city council at its May 25 meeting, and council members will vote on the budget June 8.

Reach Megan Pacer at megan.pacer@peninsulaclarion.com.

More in News

Montessori materials sit on shelves in a classroom at Soldotna Montessori Charter School on Tuesday, Sept. 20, 2022 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Education debate draws state attention to peninsula charter schools

Dunleavy would like to see a shift of authority over charter school approvals from local school districts to the state

The Nikiski Senior Center stands under sunlight in Nikiski, Alaska, on Thursday, March 14, 2024. (Jake Dye/Peninsula Clarion)
Support available for community caregivers

Nikiski Senior Center hosts relaunched Kenai Peninsula Family Caregiver Support Program

Flags flank the entrance to Gov. Mike Dunleavy’s office on Thursday, March 14, 2024, in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Dunleavy vetoes bipartisan education bill

Senate Bill 140 passed the House by a vote of 38-2 and the Senate by a vote of 18-1 last month

The Alaska State Capitol on Friday, March 1, 2024, in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
House passes bill altering wording of sex crimes against children

The bill is sponsored by Rep. Sarah Vance, R-Homer

Ben Meyer and Brandon Drzazgowski present to the Soldotna and Kenai Chambers of Commerce at the Soldotna Regional Sports Complex in Soldotna, Alaska, on Wednesday, March 13, 2024. (Jake Dye/Peninsula Clarion)
Kenai Watershed Forum gives update on streambank restoration

The watershed forum and other organizations are working to repair habitat and mitigate erosion

The entrance to the Kenai Police Department, as seen in Kenai, Alaska, on April 1, 2020. (Photo by Brian Mazurek/Peninsula Clarion)
Kenai resident arrested on charges of arson

Kenai Police and Kenai Fire Department responded to a structure fire near Mountain View Elementary

Sen. Jesse Bjorkman, R-Nikiski, speaks in opposition to an executive order that would abolish the Board of Certified Direct-Entry Midwives during a joint legislative session on Tuesday, March 12, 2024 in Juneau, Alaska. (Ashlyn O'Hara/Peninsula Clarion)
Legislature kills most of Dunleavy’s executive orders in rare joint session

All the proposed orders would have shuffled or eliminated the responsibilities of various state boards

Nikiski Middle/High School student Maggie Grenier testifies in favor of a base student allocation increase before the Alaska Senate Education Committee on Monday, Feb. 12, 2024, in Juneau, Alaska. (Screenshot)
Students report mixed responses from lawmakers in education discussions

Delegates from the Kenai Peninsula Borough School District lobbied the Alaska Legislature for more state funding and other education priorities

A child waves from the back of a truck as the 32nd annual Sweeney’s St. Patrick’s Day Parade proceeds down Fireweed Street in Soldotna, Alaska on Friday, March 17, 2023. (Jake Dye/Peninsula Clarion)
St. Patrick’s Day parade set for Sunday

The annual Sweeney’s St. Patrick’s Day Parade, hosted by the Soldotna Chamber of Commerce, kicks off at 2 p.m.

Most Read