Raise taxes? Cut services? Kenai council wants to hear from public

Posted: Sunday, June 02, 2002

It is now or never for Kenai residents wanting to have a say in the city's budget and tax rate for the next fiscal year.

The Kenai City Council will meet Wednesday to pass a fiscal year 2002-2003 budget and set the mill rate. A public comment session will be included in the meeting to give residents a chance to tell the council what they think about matters like deficit spending, the city's diminishing general fund balance and increasing taxes. Residents can contact council members before the meeting or attend it and take advantage of the last opportunity available to make their wishes known.

"I can't think of anything in the past five or six years that has been more important than this particular issue," said council member Duane Bannock. "Whatever action we take will have an effect on 100 percent of the people in Kenai. Many times actions or inactions the council takes only affects a small portion of people, but this action stands to reach every man, woman and child that lives, works or plays in the city of Kenai."

The council has debated over the proposed budget, which contains an estimated $335,000 deficit, and the option of raising the mill rate in five budget work sessions and at least one council meeting. It will have to come to a decision on these issues in this meeting, since Wednesday is the deadline to adopt a budget and set the mill rate.

If the city does not set the mill rate itself, the borough will maintain this year's rate of 3.5 mills. Some council members, including Pat Porter, Joe Moore and Mayor John Williams, have been in favor of a half mill or one mill rate increase next year to balance the estimated budget deficit.

Williams has argued the increase would not be felt because the Kenai Peninsula Borough has lowered its mill rate in past years and may lower it again this year.

The borough mill rate was 8.5 mills in 1996. It was lowered to 8.3 mills in 1997, 8 mills in 1999 and 7.5 mills in 2001. The borough assembly will vote Tuesday on whether it will reduce the rate to 6.5 mills for the 2002-2003 fiscal year.

Williams has vehemently opposed deficit spending. The city does not receive as much revenue sharing money from the state as it once did and lower interest rates, which caused the budget deficit in the first place, are not likely to rebound anytime soon, he said. The money to cover the budget deficit would come from the city's general fund balance, which is at a little more than $4 million.

Others on the council, including Bannock, Jim Bookey and Amy Jackman, have not been in favor of a mill rate increase. Bannock and Bookey have argued that an increase in taxes next year would be a difficult burden on Kenai business owners. Bannock has pointed out that the borough has been reassessing property values for the last four years, which generally results in a property owner paying more in taxes, since the tax applies to the reassessed value.

"I've been talking with my core group of friends and supporters and people that I think are like-minded, and I have yet to come across anyone who thinks a tax increase is an excellent idea," Bannock said. "The people I've spoken to ... were aghast with the possibility that the tax rate will go up in conjunction with property values," Bannock said.

In the last council meeting, held May 15, the council narrowly approved a budget amendment that gives the city's administration the task of lowering the estimated deficit by half over the course of the year in a way that affects the community the least. The administration could do this through regulating spending, budget cuts, increasing user fees on city services or whatever means it deems necessary. The remaining deficit will be covered by the general fund balance.

Mayor Williams ended the last meeting with a request that council members poll their constituents to get some citizen input into these decisions. In past budget meetings, few citizens have attended and voiced their opinions.

"The lack of interest is kind of disturbing," Moore said. "If history repeats itself there won't be many people there at all. ... It concerns me a little bit because we're the ones held accountable for what we do."

Moore said the people he has spoken to have not been opposed to a mill rate increase.

"I've had nobody tell me not to raise it since the last budget meeting," he said. "I've had a lot of people complimenting me on things the city has done with the money. ... Nobody I've talked to thinks we've spent down the fund balance for no good."

In her discussions with residents, Porter found only one person opposed to a mill rate increase.

"Most people I run into do not want this city council to run with deficit spending," she said.

Porter encouraged interested residents to look at the budget document, ask questions of council members and do research about the subject as well as come to Wednesday's meeting.

Council member Linda Swarner said she hasn't heard a majority opinion one way or the other. Mayor Williams and council members Jackman and Bookey were not reached for comment.

It was incorrectly reported in an earlier story that the council meeting would be May 29. It will be Wednesday at 7 p.m. at city hall.

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