While cuts to state municipal aid and matching grant programs have caused immediate pain in many cities, the Kenai Peninsula Borough will not face such discomforts, at least in fiscal year 2004, said Jeff Sinz, borough finance director.
To be sure, the borough saw its share of grant cuts.
Gone is $493,022 in capital matching grant money funds that historically have gone to maintain borough roads, Sinz said. Also out are the $595,095 expected from the Revenue Sharing Program and the $562,096 expected from the Safe Communities Program.
Anticipating a cut of nearly $442,000 from those two sources the amount shaved by the Legislature in its version of the state fiscal year 2004 budget adopted in May the Kenai Peninsula Borough Assembly made provisions in its own budget adopted in June. The $1.59 million received in the current fiscal year would be just $1.16 million in 2004, Sinz noted. But now, even that $1.16 million is gone, he said.
Such municipal aid money has typically gone to the borough's general fund, with sizable portions also finding their way into the budgets of the various service areas. A major recipient, Sinz said, has been the borough's road maintenance fund, which received $261,000 in fiscal year 2003 and was projected to get $183,000 in 2004.
The other significant recipients were the two hospital service areas. The $135,000 headed for the Central Peninsula General Hospital Service Area and the $108,000 aimed at the South Peninsula Hospital Service Area has vanished.
In addition, smaller sums that were to have been appropriated to other borough service areas, ranging from as little as $146 to as much as $13,075, are out the window, too, he said.
The borough's general fund itself will lose a little more than $709,000 in revenue sharing and safe communities money.
However, the borough is in line for almost $606,650 under the federal State Fiscal Relief Program. That's one reason the borough is able to handle the drastic cuts, Sinz said.
Another is the $623,251 the borough is to receive from the Fisheries Revitalization Program. Like the Fiscal Relief Program, the fisheries funding is one-time money to be received in 2004, Sinz said.
"In terms of impact in '04, then, we are losing $1.157 million in revenue sharing and safe communities, but we are receiving one-time funding of $1.227 million," he said. "So if your view of the world is one year, the borough will receive more money in '04 than it would have under the reduced level of funding already anticipated in revenue sharing and safe communities."
A third reason the borough will be able to deal with the cuts is its policy of maintaining a healthy fund balance. The borough has around $25 million in the bank, enough to allow the borough to meet unexpected external events, Sinz said.
"This absolutely does have an impact," he said of the governor's decision, "but rather than reacting in a knee-jerk way, we can make changes in a deliberative, rational way."
Sinz said it would be up to the assembly ultimately to decide how to spend the Fiscal Relief Program money, money with no real strings attached. He said he wasn't certain if the fisheries program funds were similarly unencumbered, but generally the borough considers it fisheries tax revenues' money that typically goes into the general fund.
The combination of factors, for this year at least, will leave the borough in a position to emulate what would have occurred had the governor signed the Legislature's version of the budget and made no cuts, Sinz said.
But the borough budget will have to start accounting for a lack of such funding in future years, he said. Murkowski has said the Revenue Sharing and Safe Communities programs will not be part of his fiscal year 2005 budget package. Neither would the municipal matching grant program.
Whether the Legislature goes along with that, remains to be seen.
On a positive note, Sinz said an anticipated reduction in school funding did not occur and the borough will receive some $2.67 million, nearly $267,000 more than had been anticipated.
"That was part of the governor's decision, in effect, to not impact funding for education," Sinz said.
One result will be the district will get more foundation money from the state, which will increase the amount allowed as a local match.
"It creates an opportunity for the borough to increase local funding to schools by $525,658," Sinz said.
That decision lies with the assembly.
"My understanding is that the school board will consider adjusting their budget at the July 7 meeting. We would anticipate a request to increase local funding then," he said.
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