Borough tax changes bail out Road Service Area

Posted: Sunday, June 11, 2000

The Kenai Peninsula Borough Road Service Area took a new lease on life with the budget that passed the borough assembly Tuesday.

The assembly upped the Road Service Area tax by .5 mills, equivalent to a tax hike of $50 for each $100,000 in assessed property value. That should net the service area another $1.2 million per year.

Rural residents will see no overall tax hike, though, since the assembly cut the boroughwide property tax from 8 mills to 7.5 mills. City residents, who do not pay the Road Service Area tax, will see overall taxes fall by .5 mills.

The assembly passed the borough's $79 million fiscal 2001 spending plan with little debate. What drew opposition from Kasilof assembly member Paul Fischer was Borough Mayor Dale Bagley's proposal to raise the Road Service Area tax from .5 mills to 1 mill.

Road Service Area voters rejected raising the tax by up to .5 mills in a ballot proposition a year and a half ago, he said. The vote was 60 percent against hiking the tax.

"It may be needed. I'm not arguing that, but the point is, the people did vote no, decisively," he said.

He suggested putting the proposed road tax increase on the ballot in October.

Bagley said he understood Fischer's concern but disagreed with his interpretation.

"The way I interpreted that vote that took place was that people were saying, "We do not want our taxes raised. We want you to make do with what you've got. We want you to find the money,'" Bagley said. "That's what we've done. We've lowered the general mill rate and raised the road service mill rate. Nobody's taxes go up, and hopefully we will have another $1.2 million for roads."

The Road Service Area has been depleting savings. It ended fiscal 1998 with a fund balance of nearly $920,000, but subsequent heavy snows atop cuts in state aid have taken a heavy toll. It drew nearly $284,000 from savings in fiscal 1999.

This fiscal year, the assembly had expected service area spending to exceed revenues by $172,000. However, heavy snows last winter pushed the cost of plowing far beyond expectations. The assembly finally appropriated an extra $400,000 to see it through the year. The budget shortfall more than doubled.

Borough Finance Director Jeff Sinz now projects a service area fund balance of just $267,000 by July 1. Without the tax hike, the service area could spend the last of its savings in the coming fiscal year. With the hike, Sinz projects it will spend $2.25 million, put nearly $478,000 into savings, and finish the year with a fund balance of $745,000.

Assembly member Tim Navarre of Kenai said the assembly knows the numbers.

"We know for a fact that come this winter, if we do nothing, there's a good chance the roads wouldn't be plowed," he said. "It becomes a health, life and safety issue -- people getting out, getting to the hospital, services like fire trucks being able to get through. I also don't think that's what the people voted for."

Bagley's proposal is a tax shift, he said. It does not increase anyone's taxes. If the people knew the numbers, he said, they would support it.

Assembly member Drew Scalzi of Homer said he probably would have voted against a tax hike, too, if he did not know the numbers.

"I think that by and large, a lot of the public is ill-informed on what the budget for the road service takes," he said. "When you tell a constituent that for a $100,000 assessment they're paying $50 per year for road maintenance, that's a real good deal. You can't get your driveway plowed for that more than twice."

He said the service area is in dire need of money and supported Bagley's plan. When service area savings recover, he said, it may be possible to lower the tax rate.

Fischer said the assembly should avoid second-guessing voters.

"We're saying, 'If you had known better, you would have voted yes.' I don't think the general public is stupid. I think they did know what they were voting for," he said.

Earlier in the meeting, assembly member Jack Brown of Nikiski had marveled that there were no public comments on the fiscal 2001 budget.

"Why bother?" Fischer asked. "If they express themselves on this, it probably won't change the vote."

Even so, the assembly voted 6-2 against his proposal to keep the road tax at .5 mills. Fischer and Grace Merkes of Sterling cast the dissenting votes. Patrick O'Brien of Seward was absent.

The borough approved the new mill rates 7-1, with Fischer dissenting. Aside from the boroughwide and Road Service Area taxes, there are no changes from 1999 tax rates.

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