The Kenai Peninsula Borough Assembly will get their first look at the borough’s proposed fiscal year 2022 budget on Tuesday, formally beginning a budget process that is not expected to conclude until next month.

The borough’s fiscal year begins on July 1, 2021 and ends on June 30, 2022.

In all, the borough is anticipating almost $144 million in total revenues, more than half of which — over $75 million — would come from property taxes. The borough won’t finalize the FY22 mill rate until June, but it’s projected to stay consistent with previous years at 4.70. The last time the borough’s mill rate changed was in FY19, when it increased from 4.50 to 4.70.

Mill rates are used to calculate how much someone will pay in property taxes during a certain fiscal year. Kenai Peninsula Borough Finance Director Brandi Harbaugh said Monday that borough service areas have their own mill rates, as do incorporated cities and hospital service areas. To calculate how much property tax they expect to pay, an individual must divide the mill rate by 1,000 and then multiply that by their property’s taxable value.

For example, someone who owns property in the City of Kenai with a taxable value of $100,000 should expect to pay around $435 in city property taxes in FY22 and $470 in borough property taxes. Overall, the borough is expecting to take in about $5.5 million more from property taxes in FY22 than it did in FY21. In preparing the FY21 budget, the borough expected property tax revenue to be down about 6%. Actually, that percentage is now estimated to be between 1% and 3%.

The borough is projecting about $158.6 million in total expenditures, which would result in an overall deficit of about $12.2 million after money leftover from the current fiscal year is considered.

Of those expenditures, more than a quarter — about 27.91% — is expected to be spent on borough staff. Another quarter would be spent on services contracted out by the borough and another quarter — about 23% — is expected to go to the Kenai Peninsula Borough School District.

The borough expects to take in about $78.6 million in revenue to its general fund, which is used to pay for the borough’s general Operations, Education, Solid Waste, Capital Projects and debt service, including administration, emergency management and planning and zoning, among others. Of that, more than 50% is expected to come from property taxes and about 40% is expected to come from sales tax revenue.

The borough is projecting about $87.8 million in general fund expenditures. More than 60% — about $54.8 million — of the projected expenditures would go to education. That includes funding the Kenai Peninsula Borough School District at $48 million — $5 million more than what Borough Mayor Charlie Pierce initially proposed and $5 million less than what the district initially requested.

Budget negotiations between the borough and the school district were underway for months before the district formally submitted its final request of $48 million last month. Outgoing KPBSD Superintendent John O’Brien initially stated that the difference in what the district was requesting and what the borough was offering could mean the loss of over 100 teaching positions. Borough Mayor Charlie Pierce said that the borough had less money than usual due to how the COVID-19 pandemic impacted borough sales tax revenue.

KPBSD later learned that it would be receiving a third round of federal funding via the American Rescue Plan passed by Congress in March, which the district determined would give it enough money to save teaching positions and still offer remedial programs to help students who fell behind academically during the pandemic.

The assembly can propose changes and amendments to the budget document after it is presented on Tuesday, but must ultimately approve a budget and mill rate by June 15. The borough’s full FY22 budget draft can be found on the borough website at www.kpb.us.

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.