If the Kenai City Council passes the proposed fiscal year 2004 city budget, Kenai residents will notice a change to their wallets and some of the services the city offers next year.
The council had a work session Monday in which the city's administration gave the council a presentation on the draft budget.
The administration prepared the budget following several guidelines the council set out in February -- a mill rate increase of 1.5 mills (bringing the rate from 3.5 to 5 mills), no change in the sales tax rate, that employees be required to contribute to the cost of their health insurance, that employees not be given a cost of living wage increase and that the budget have no more than a $500,000 deficit to be covered from the general fund reserve.
To accomplish this, budgets in nearly all city departments -- except public safety -- were reduced by about 10 percent and about $1.2 million was cut in all. Overall, the city's budget was reduced by 6.42 percent, according to Finance Director Larry Semmens.
The administration's goal in making these cuts was to find the best balance between layoffs and cuts to operational funds while prioritizing the retention of city services, said City Manager Linda Snow.
"We tried to find and keep to the path of the lowest impact of the services the city of Kenai offers," Snow said. "There will be service impacts, but we tried to maximize (the services that are still offered). We tried as hard as we could to minimize layoffs. If we have to cut next year, that's where we'll have to cut."
Even though it was a priority to minimize cuts in public services, Kenai residents still will notice some differences in the way the city operates next year, if this budget is approved:
n The Kenai Recreation Center will be operated by the Boys and Girls Clubs of the Kenai Peninsula, provided the city council and club's board of directors agree to a partnership. The city will pay for the maintenance and utilities of the facility, provide $125,000 in operating costs to the club and eliminate 3.5 full-time and 10 part-time positions while the club will run the facility.
n The Kenai Multipurpose Facility will operate two months less than it did this year.
n The Kenai Public Library will be closed two days a week, three part-time positions will be cut and the operating budget will be significantly cut.
n The dock will operate from May through August -- two months less than this year -- and operational funding will be severely reduced.
n The dust control program will be eliminated and funding for other street department operations will be severely reduced.
n No funding will be available for new street lights, and funding for repairs will be reduced.
n The Kenai Visitors and Cultural Center will operate fewer hours.
n The city newsletter will be published semiannually rather than quarterly.
The budget also has been cut in other ways that will not be readily apparent to Kenai residents. For instance, the city's travel and training budget will be reduced, all funding for scheduled building maintenance will be eliminated, the city's code enforcement officer position will be eliminated and the half-time clerk's assistant position will be eliminated.
Many of these cuts, like the elimination of building maintenance funds and the reduction in the travel and training budget, won't hurt the city this year, but could become serious problems in the future if funding is not restored.
The need for such cuts comes from the dreary financial outlook the city is facing. Several factors contributed to this situation, including the decrease in municipal assistance and revenue sharing funds from the state in its proposed fiscal year 2004 budget, the drop in sales tax revenue that will result from the closing of Big Kmart, the loss of interest revenue since interest rates have dropped nationwide and an increase in insurance costs.
The city is expected to have about $5 million in its unreserved and undesignated budget reserve at the end of this fiscal year and about $4.3 million at the end of next fiscal year. However, things could change between now and then.
"We have no way of knowing what is going to happen," Snow said. "This (budget) is a projection, this is a plan."
Interest rates could rise or another large sales tax-generator could move into the city, which would improve the city's financial standing. However, if matters continue to get worse, another increase in taxes or decrease in services will be required to keep the city in business.
"Five-hundred-thousand (dollars) is still a big deficit," Semmens said. "This general fund will not continue to be able to absorb a $500,000 deficit for perpetuity."
The council will discuss the proposed budget at work sessions on Monday and Tuesday, both starting at 6 p.m. The sessions will be in the council chambers at City Hall, 210 Fidalgo Ave., and are open to the public.
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