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City manager shows where money goes

Money well spent

Posted: Wednesday, July 24, 2002

The business people who generate commerce for the city of Soldotna got to hear where that money goes Tuesday afternoon, as Soldotna City Manager Tom Boedeker spoke before the Greater Soldotna Chamber of Commerce.

Boedeker's talk, though mainly focusing on the city's finances, also touched on a wide range of city issues.

"Everything you wanted to know about your city, but were afraid to ask," said Boedeker during his introductory remarks.

Boedeker's speech was highlighted by several handouts detailing where the city gets its money from, and how it gets spent. The charts, including itemized breakdowns of all city services, illustrated just how tightly the city manages its finances. Boedeker said this year's city budget leaves only about $20,000 leeway between expenditures and expected revenues.

"That's how tight the budget is," he said. "There will be about $20,000 more that we take in than we spend. That doesn't leave much room for error."

The charts showed that the city will need nearly $3.5 million this year for operating expenses -- staffing parks, paying city employees, maintaining roads, operating utilities and upholding public safety. The other part of the city's budget, approximately $2.4 million, will be spent in capital expenditures. Capital expenditures include improvements to city streets, buildings and other facilities.

Boedeker said the sales tax numbers are important to the business community because roughly $3.4 million, over half the city's revenues, are derived from city sales taxes. By comparison, only around $400,000 is generated in property taxes.

He stressed throughout his remarks that sales taxes are crucial to maintaining a stable city budget.

Chamber president Lisa Wimmer asked Boedeker if sales tax revenues are rising in Soldotna.

"So far this year, they've been tracking well, but we've not had the growth we've had the past couple of years," he said.

Boedeker told the chamber that capital projects are important because of the standard of living increases they bring to the city. He rattled off several capital improvements made in the past year by the city, including improvements to city streets and parks, and renovations at the Soldotna Sports Center.

"We've done a lot of parks projects over the last few years," he said. "They are spectacular. We have the highest percentage of handicap river access in the state, bar none."

Although the city is running within its budget this year, Soldotna will have to look at generating new sources of revenue to pay for much needed improvements to the city's sewer system, Boedeker said.

He said that within the next five years, Soldotna will need to upgrade its water and sewer system. When that happens, new revenues will have to be found.

He said one way of bringing new revenue to the city could include extending the city's existing water and sewer lines in order to bring new customers into the fold. He said he's advised the city council in the past that extensions could add much needed revenue sources.

"We've either got to have new customers or seriously look at massive increases in (utility) rates. I'd rather have new customers," he said. "It's not cheap, but that's the only way you're going to get new customers.

"I told the council, 'I don't know how many (customers) you'll get, but I know how many you'll get if you don't extend (water and sewer)."

Boedeker punctuated his remarks by stressing how the city could be affected if a borough initiative to exempt groceries from sales tax is passed at the next election. He said that, given the city's reliance on sales tax, drastic measures would have to be taken in order to balance the budget. He said if the initiative passes, the hit the city would be around $1 million.

Boedeker said he wasn't speaking for or against the initiative, just pointing out the facts. He said the city would have two choices to make up for the deficit a sales tax reduction would cause: raise property taxes or cut city services.

"You either raise those (property) taxes or you cut back somewhere," he said. "(Then) you have to figure out what a million dollars of you don't want. There's no two ways about it, one or the other happens."

However, Boedeker stressed to the assembled business leaders that Soldotna is standing on solid economic footing, for now.

"We're doing well," he said. "The blessing is, of course, that we're still in better shape than most communities."



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