Tuesday, March 17, 2009

Carey: Taxpayers should have more money left in pockets

By Jenny Neyman
Redoubt Reporter

Kenai Peninsula Borough Mayor Dave Carey is keeping an eye on troubling financial times he sees on the horizon as he prepares the borough’s fiscal year 2010 budget.

“I am going to be very conservative. If I don’t know we have money in the bank, I’m going to assume we do not have it,” he said.

Several factors have put him ill at ease. Oil prices have dropped over the past year. During a trip to Juneau four weeks ago, legislators gave notice that the resultant decrease in state funds could mean a decrease in funds passed on to local municipalities, Carey said.

“The forward funding they set aside for revenue sharing was very much now in play. Up to 50 percent of that could end up not coming to us,” Carey said.

He’s heard that increases in state education funding are secure, but he’s concerned about the capital budget, which has not yet been released. Projects that had been cut from previous attempts at state funding were expected to see money this year, but that may no longer be the case, Carey said.

Local revenue is also in question, he said. He does not yet know how much the seasonal sales tax exemption on nonprepared food will decrease revenue, and property tax revenue may not come in as expected, either.

Property tax assessments have been sent out, and as of Friday 1,740 people had contacted the assessor’s office seeking to have their assessment lowered — thus having to pay less in taxes, Carey said. He said Monday that he’d heard 340 of those assessments were being changed.

Carey is also waiting to hear how much the borough can expect in oil and gas industry property taxes. Last year the borough budget included $603 million in oil and gas industry property taxes, Carey said. The state does assessments on all oil and gas property taxes, and businesses still have a chance to appeal and get their assessments lowered.

“The question is, how much do we get?” Carey said.

Carey is required to submit a budget to the assembly by May 1, but said he may not have answers to these questions before the budget is due. As a result, Carey said he’s taking a cautious approach by examining all aspects of the budget for areas that can be trimmed. Times are tough for borough taxpayers, too, he said, so his goal is to keep as much money in taxpayers’ hands as he can, possibly through a mill rate reduction.

“We’re committed that in these difficult economic times, if we can lower how much money we take out of people’s pockets, it would be better than if we increase it or even if we keep the same,” Carey said.

Carey asked borough departments to submit budgets with no more than a 4 percent increase, he said. And service areas are being examined for ways to save funds, although that isn’t an area Carey has much control over, since borough voters approve service area mill rates.

Grants are being examined to make sure they are “good” grants — ones that won’t stick the borough with years of costly maintenance, management or upkeep costs after the grant capital is spent. The level of forward funding required also will be examined in applying for grants. Many grants require the recipient to pay costs up front and apply for reimbursement, which can strain a municipality’s fund balance if it doesn’t have the money available to do that.

Carey also has moved to zero-based budgeting for nondepartmental agencies, including the Kenai Peninsula Tourism Marketing Council and the Kenai Peninsula Economic Development District. Affected nonprofit agencies will start out with no borough funds allocated to them, although money may be added back into the budget as the agencies’ purposes and contributions are examined, and the appropriateness of borough funding is considered, Carey said.

“Primarily in these tough economic times, I believe government has to be extremely frugal in how we spend public money, which is what my goal is and that is what we will do,” Carey said. “It is obviously a partnership between myself and the assembly and the people as to what the mill rate will be and what the budget will be and it is very much a concerted team effort.”

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