Most departments in the borough are looking at budget cuts in the upcoming fiscal year in personnel, supplies, contracts or other assorted expenses.
The Kenai Peninsula Borough Assembly began the long process of walking through the fiscal year 2019 budget Monday, with hearings continuing all day Tuesday. Borough Mayor Charlie Pierce has proposed a budget with $81.7 million in general fund expenditures, with total government expenditures budgeted at $142.5 million. Some departments, like Central Emergency Services and the borough Assessing Department, will get more full-time staff under the proposed budget, but most departments are cutting expenses this year.
The mayor’s budget proposes about $976,000 in cuts to general fund expenses and a one-time transfer of $4.5 million from the land trust fund, said borough Finance Director Brandi Harbaugh in a presentation to the assembly on Tuesday. The land trust withdrawal would be paid back over time, half in 2020 and half in 2021, she said.
One of the main considerations at play this budget cycle is keeping the borough’s fund balance above the minimum required amount of $15 million. The fund balance has steadily decreased over the last four years, Harbaugh said.
“$15 million isn’t a lot,” she said. “It certainly doesn’t allow us to reflect all of our commitments on our balance sheet.”
Overall expenses are down about $183,827 in the proposed budget, and the general fund contribution to the Solid Waste department is down $242,431 “due to an overall tightening of expenditures,” according to the budget.
The cuts were easier in some departments — expenses in the elections operations are scheduled to fall by half because there will be no mayoral runoff elections this year, for example — while others led to consolidations in positions or reductions in transportation spending.
The Purchasing and Contracting Department, which handles capital projects and purchasing for the borough, is proposing to cut a project administrator position and supply funding. The Finance Department is reducing one auditor/accountant position to half-time and reducing travel.
The roads and maintenance departments have been reshuffled and Pierce has proposed linking them in the future. Since former Roads Department Director Pat Malone retired in January, Maintenance Director Scott Griebel has been working both roles, with a roads engineer job eliminated. However, the mayor has proposed adding a Road Senior Manager to help with the daily administration of that department.
“Having already had a job to do when entering this, it’s a bit of a drain,” Griebel told the assembly during the budget hearings Monday. “The thing that’s draining on me right now is the day-to-day … it’s just a constant barrage of conversations.”
Pierce told the assembly his administration chose to consider each job at the borough that became vacant as possible for elimination or consolidation. In the case of the maintenance department and roads department, they did so but it was clear they need another manger.
“We needed a wait-and-see period and we’ve gone through that wait-and-see period,” he said during the hearing Monday. “I believe Scott is the right director to oversee all of the activities over there, both roads and maintenance, but it’s clear he needs some help.”
There are some expenses the borough has struggled to control — particularly health insurance costs. A self-insured entity, the borough has regularly seen large increases in health care costs. They dropped in 2016 after the borough implemented a high-deductible health care plan option in concert with the more expensive traditional option. The borough saw a significant increase in enrollment in that plan, said Human Resources Director Stormy Brown.
“We had an uptick of 33 percent into the high deductible plan, which helped us recover some of that cost,” she said.
The borough is also developing a plan to help control workplace injuries, which are a major cost contributor in part because of the medical costs. Brown told the assembly the administration is still working on the particulars of a program. Pierce said he wants to recognize employees who have been safe as well as incentivize others who have had accidents to be careful in avoidable accidents.
“What I’d like to see is an effort made by everybody who works for the borough to be more mindful in taking some ownership,” he said. “We really can make a difference as individuals. Just having that conversation and being honest with each other, I think would help reduce some of these numbers.”
Pierce has also said he wants the assembly to look forward to future years during the budget planning process. Assembly members have proposed a number of tax increase options to help support the general fund, including a .5 percent sales tax increase, a repeal of the seasonal nonprepared food tax exemption and a possible bed tax.
In the past decade, the assembly has made a number of tax cuts that reduced revenue to the general fund. The nonprepared food tax exemption — which makes groceries in the borough outside the home-rule cities exempt from sales tax for nine months of the year — has reduced sales tax revenue to the borough by about $3.3 million per year, or $33 million over 10 years, Harbaugh said. The increase in the residential property tax exemption from $20,000 to $50,000 has reduced property tax revenue to the borough by about $6.5 million over the last five years, she said.
Reach Elizabeth Earl at firstname.lastname@example.org.