A new term for me serving on the Kenai Peninsula Borough Assembly will be like the coming days on Kachemak Bay. I expect days of joy, experiencing pretty weather with light playing across the mountains being reflected on a blue calm bay. Other days will see a storm fierce from the Gulf of Alaska. Days of concern for mariners and watching relentless waves pound strong on eroding shorelines.
Ok, that’s a bit melodramatic, but I do expect the future will be challenging as the assembly and the newly elected mayor adjust to one another. This will occur while the new administration transitions from campaigning into governing a $100 million dollar organization.
As we grope for a smooth working relationship, we will be adjusting to the voter mandate of nine months with no tax on unprepared food. Many people, myself included, have long felt uneasy with the idea of taxing food. But is it OK to tax the fuel that heats your family, but not the food that warms from the inside? Is there really much difference?
There are many unanswered questions. The last time we voted on not taxing food, it was for 12 months of the year, and that vote went the other way. Was it the scary economic conditions this time? Since all sales tax is dedicated to the schools, are we to reduce school funding, or do we increase property tax to make up the difference?
Depending upon the scale of the sales tax change, and if our local economy holds fairly steady, I expect the assembly can hold property taxes at the current levels for perhaps 18 months. By then, if not sooner, the unallocated budget reserves will have been reduced to minimum or below safe levels.
At the onset of the last administration, the budget was found in disarray and the Borough was in danger of running out of operating funds. Budget discipline and a sales tax increase brought our fund balance to recommended levels, while our property tax mill rate is at its lowest in over 20 years. The Assembly, and new mayor, has serious work ahead to sustain services, while maintaining a responsible reserve. Without prudent reserves for operations and contingencies, bond ratings suffer and insurance costs increase.
The borough has begun an effort to contain energy costs. This nascent program is endangered by personnel changes made by the new mayor. It is important to me to continue this essential energy-use reduction to save tax dollars and constrain greenhouse gas emissions.
Alaska and the Kenai Peninsula are well positioned to continue working through the economic turmoil ahead. Our state budget is still large even with the falling oil prices. Although we have a slowdown in residential construction, our housing markets are not going to crash like those in the small states. We can look forward to strong years of other types of construction, and lower fuel costs will aid fisheries. Government is always a significant contributor to the local economy and will remain steady employer.
Like any well-managed businesses, tourism is re-styling marketing efforts in response to an evolving business climate. Times change and it is normal for business to be cyclical. Our enterprising neighbors are inventively recalibrating their ventures and we will continue to do business at healthy levels. We are fortunate that in-state customers primarily drive Peninsula tourism. It may be a few years before a boom returns, but that’s pretty normal.
Looking forward to pipelines and other industrial development, there will be plenty to keep us working for the years to come. The towering challenge will be accomplishing the work ahead with Alaskan labor. Our kids will have work, but we need to get them trained.
We Alaskans are always alert for moose on the road, but that prudence does not keep us home. Just so, we will work together and make it through econ-turmoil in fine shape.
Fear creates its own reality, so remember: “The only thing we have to fear is fear itself.”
I really appreciate all the people who have approached me with thanks for continuing to serve on the Assembly. Thank you; I will do my best to fulfill your hopes.
Bill Smith is a Kenai Peninsula Borough Assemblyman
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