The city of Kenai has a bare bones budget for next year, that may get barer still.
In its Wednesday meeting the Kenai City Council passed a fiscal year 2004 operating budget that increases taxes and reduces or altogether eliminates some services city residents will have to do without next year.
"It's a very lean budget that's been cut tremendously," said Kenai Mayor John Williams in a state of the city address at the Kenai Chamber of Commerce luncheon Wednesday.
The overall budget, including all city funds, calls for spending $12,417,414 next year, with revenues estimated at $10,883,618.
In the general fund, the city's savings account which provides the money to pay for things like public safety, public works and parks and recreation departments, the budget calls for spending about $7.9 million. This is $572,000 less than last year's budget, which was cut thin to start with.
Some of the measures taken by the city to reduce the budget include cutting four full-time and 14 part-time employees, reducing the council's salary, requiring employees to contribute to their health care costs, cutting building maintenance, eliminating the dust control program on unpaved city streets during the summer, reducing the city dock and Multipurpose Facility operations by two months, contracting out the operation of the Kenai Recreation Center, cutting the city's contract with the Kenai Visitors and Convention Bureau by $10,000, reducing travel expenses and other operating accounts, and cutting the library's funding to buy books.
At the direction of the council, the city's administration raised the mill rate 1.5 mills, from 3.5 to 5 mills. The city's water and sewer rates also were increased.
When the budget cuts and tax increases were done, a $485,477 deficit was left to be absorbed by the general fund. That number may increase by $227,250, however, if Gov. Frank Murkowski cuts revenue sharing and municipal assistance funding from the state's budget, as he has indicated he may do. If that happens, the $485,477 general fund deficit will jump to $712,727. At that point, the council will have to decide whether to pay for that from the general fund, make additional cuts to the budget or raise revenues.
"I don't know what we're going to do about the other $227,250," Williams said.
The possible cut to state revenue sharing and municipal assistance is the latest in a string of factors that have negatively affected Kenai's budget this year.
The closure of Big Kmart made a major dent in Kenai's revenue, since the city got about $800,000 a year in sales taxes from the store.
The continued decline in interest rates further cut into the city's revenue. Williams said 8 percent of the city's revenues used to come from interest earnings. Now the general fund only gets 3 percent of its revenue from interest earnings.
"And that's nothing that we could plan on," Williams said. "It's a problem that we're just beside ourselves with."
Insurance rates have risen from $94,000 in the fiscal year 2002 budget to $204,000 now, and the cost for the Public Employee Retirement System has risen as well to $140,000 this year and an expected $240,000 next year.
"All these things the council has had to come to grips with in the last few months," Williams said.
Williams has commented in past meetings that it's fun to be on the council when there's money to burn, but not so enjoyable when funds are tight and decisions about cutting services and personnel are required.
"We lived through some tremendous times," he said. "We're on the other end now, folks, and what are we going to do?"
Williams said the city still has about $29 million.
"We are far from broke," he said. "Our duty is to remain in good financial standing."
There was relatively little discussion on the budget before the council voted to pass it Wednesday evening. What discussion there was centered on the city's approval of a partnership agreement with the Boys and Girls Clubs of the Kenai Peninsula to have the club operate the Kenai Recreation Center.
At its last meeting May 21, the council voted 4-2 to approve the partnership, with Williams and council members Jim Bookey, Joe Moore and Pat Porter voting in favor of the partnership and council members Amy Jackman and John "Ozzie" Osborne voting against it.
Since Osborne and Jackman did not approve of the partnership being part of the city's budget, they voted against the budget ordinance. Council member Linda Swarner, who was absent at the May 21 meeting, said she also did not approve of the partnership agreement, so she voted against the budget ordinance as well. Bookey, Moore, Porter and Williams voted in favor of the budget ordinance, so it did pass. (See related story, page A-1)
In other business Wednesday, the council:
n Approved rezoning 16 education-related properties in the city to a newly created "education zone" designation.
n Approved setting the mill rate for the fiscal year 2004 at 5 mills.
n Approved transferring $55,000 from the non-departmental contingency fund to the finance department to buy accounting system software and related items. Finance Director Larry Semmens explained that the department's current accounting system had a five-year lifespan when it was purchased, and that five years is up so it is fast becoming obsolete.
n Approved spending $12,000 for street light utilities.
n Did not approve awarding a bid of $26,825 to J & D Painting and Drywall Inc. to paint the exteriors of the Kenai Library and Public Safety Building. Swarner and Porter voted for painting the buildings, while Bookey, Moore, Osborne, Jackman and Williams voted against painting them.
n Approved passing a resolution that objects to the elimination of municipal revenue sharing and safe communities funding from the state's fiscal year 2004 budget.
n Did not approve spending nearly $10,000 to do some paving at the sewer treatment plant and $6,269 to repaint a mobile sweeper.
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