The Kenai City Council on Wednesday approved the city’s spending plan for the upcoming fiscal year, which includes a flat mill rate and sales tax, raises for city employees and projects $10 million in sales tax revenue.

In Kenai’s general fund, the city is projected to take in about $19 million and to spend about $19.5 million. Once roughly $925,000 in lapsed funds roll over from the current fiscal year, the city expects there to be a general fund surplus of about $436,000 in fiscal year 2025.

Of the $19 million expected to flow into the city’s general fund for the upcoming fiscal year, more than half — about $10 million — will come from sales tax. Another 22.7% will come from property taxes. Of the $19.5 million in planned expenditures for the same fund, about 46.5% will be put toward public safety and about 21.1% will go to government operations.

The city is projecting more than $317 million in taxable sales within the city in fiscal year 2024 — an increase of about $9.2 million from fiscal year 2023.

The city’s invests about $5.8 million in capital projects around the city. Capital projects generally refer to projects needing a one-time expenditure of more than $35,000 and that have a lifespan of more than one year. The city’s capital improvement plan groups projects by which of the city’s six funds would pay for them.

Kenai City Manager Terry Eubank wrote in a transmittal letter accompanying the budget document that a $5.8 million general fund investment in city capital projects is enough to pay for the first four years of the improvement plan. Among those projects are the rehabilitation of Lilac Street, the replacement of playground equipment in Old Town and replacement of pavilions at city parks.

A trove of new federal funding opportunities, Eubank said in the letter, has allowed the city to make new investments in those types of projects.

“During the preparation of this budget, we were fully cognizant of the need to ensure the long-term value of investments and the financial stability of our City,” Eubank wrote. “Over the last several years, a combination of Federal stimulus and tax revenue growth has put the City in a unique position to make overdue strategic investments in our aging infrastructure.”

Citing high inflation, the budget applies a 2% one-time bonus from the previous fiscal year to city employees’ base salary and then applies a 4% increase to employees’ base salary.

On the same night they adopted the city’s budget, Kenai City Council members also approved legislation changing the section of city code that addresses personnel. Those changes were proposed by a city working group that convened with the goal of boosting recruitment and retention.

Among other things, the new policy greenlights the use of recruitment incentives for positions that are hard to fill, gives some employees the option to work remotely for two weeks, adds a half-day holiday on either Christmas Eve or New Year’s Eve and postpones a planned increase to employees’ cost share for health insurance.

Multiple council members during Wednesday night’s council meeting thanked city staff for their work on the budget document.

“Thank you to staff for all the work you put into it,” said council member Alex Douthit. “We had some really good meetings. … Being my first budgeting work session, it was an interesting process to go through and very informative.”

A draft version of the city’s budget, which was amended in minor ways on Wednesday, can be accessed at kenai.city.

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