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Kenai sales tax gets boost

Posted: Thursday, May 27, 2010

With the new Walmart store driving sales in the area, the City of Kenai is predicting an increase in taxable sales and sales tax reveue for the upcoming fiscal year.

"For 2011 we are projecting a net increase of $600,000 over the final projected number for 2010," said Rick Koch, city manager.

Koch was quick to note that while Walmart might have increased sales for certain businesses, like restaurants, other outfits might be seeing a decrease in sales.

"There are going to be retailers who lose sales because of the competition and those who get sales because of the increased traffic," explained Terry Eubank, Kenai's finance director.

The projected increase was calculated by trending the percentage of sales tax revenues from last year's fiscal quarters, he said.

For example, the City of Kenai typically receives 30 percent or the highest amount of its annual sales tax revenue from July 1 to Sept. 30, he said.

Walmart opened right before the last quarter of the 2010 fiscal year, giving the city a boost in sales tax income.

So far this year, Eubank said the city expects to see about $200,000 in sales tax revenue from the new store based on sales from April 1 through June 30. That's good news for the city, which previously was not meeting its sales tax revenue projections for 2010.

"Last year in the FY 2010 budget the city projected a 3-percent growth in sales tax," he said, explaining that in the first two fiscal quarters sales tax was down slightly. "Because Walmart opened this last quarter we feel we'll meet the projections for fiscal year 2010."

That extra sales tax revenue for next fiscal year will be added to the $12 million general fund pot to be used for other city needs in its nearly $20 million projected budget for 2011, Koch said.

Although the proposed budget goes up, it makes up for a .15-mill decrease in property taxes, he said.

The additional sales tax revenue from Walmart's impact could cover this reduction in property tax revenue for the city, Koch said.

This is the second year in a row Kenai reduced its mill rate for property tax.

"Our revenues are healthy and government should not be in the business of creating surpluses," he said.

In a budget work session on Monday night, Kenai's city council talked about adding more personnel next year, like three firefighters and possibly a new full-time position to the city's finance department.

"Some of the things we talked about were $19,000 for sidewalks at Leif Hansen Park," said Bob Molloy, council member, as well as "whether or not to add more money to the comprehensive planning process for a town site historic component."

A public hearing for Kenai's fiscal year 2011 budget is slated for Wednesday's meeting.

Brielle Schaeffer can be reached at brielle.schaeffer@peninsulaclarion.com.



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