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Kenai fiscally sound

Posted: Thursday, May 25, 2000

There will be no increase to Kenai city sales or property taxes in the coming fiscal year, and the city should close the year in the black.

"With our cash position and our growth position, I think we're in an excellent situation," Mayor John Williams said. "Over the next five years, as industry expands, the city is in a position to expand with it. We have the infrastructure we didn't have years ago. We have area for business to expand. We have communications. Our utilities are in great shape."

Williams painted a bright picture of Kenai's finances during his state-of-the-city address Wednesday at the weekly Kenai Chamber of Commerce luncheon.

The city has lost close to $1.4 million per year in state revenue sharing and municipal assistance since 1985, he said. Since 1991, though, its sales tax revenues have grown by roughly $900,000 per year, and its property tax revenues by roughly $600,000 per year.

Williams attributed that to growth in the economy fostered by projects such as construction of the Alaska Regional Aircraft Rescue and Firefighting Training Center, improvements to the city airport and the sales of city land for private development.

"We have managed to make up that entire $1.4 million loss by growth, taking advantage of good opportunities that have taken place, and by just good administration," he said. "We haven't had to raise taxes to make up that loss."

The city sales tax will stay at 3 percent and the city property tax at 3.5 mills, equivalent to $350 per $100,000 in assessed value, under the budget City Manager Rick Ross has proposed to the Kenai City Council. That comes up for a final hearing and adoption June 7.

The administration proposes total city spending of $12.4 million and projects earnings of roughly $11.8 million. On paper, the city will draw the missing $622,000 from its savings, which now total more than $30 million.

The actual draw is not likely to be that much, though, since the city generally does not spend as much as it budgets. For fiscal 2001, the administration estimates that roughly $482,000 in budgeted expenses will be deferred until the following year or not spent at all. Including that and other credits, Finance Director Larry Semmens said, he expects that by year's end, the city actually will add about $35,000 to its savings.

Williams said the large city savings account saves taxpayers money. In the coming year, cash in the city's general fund alone, about $8.7 million, will generate an estimated $685,000 in interest, equivalent to the income from 2 mills in city property taxes.

In addition, he said, when the economy is down, tapping savings allows the city to balance the budget without raising taxes or cutting services.

"Cash is a great position to be in," he said.

Williams said taxes generate 40 percent of the city's revenues -- more than any other single source. The administration projects sales tax revenues of $3.6 million and property tax revenues of $1.3 million in the coming year.

Personnel accounts for more than half of city spending, he said, and city maintenance and operations account for more than a third.

"People are what make the city run," Williams said.



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