Mayor Carey talks budget, bonds and his own salary

• Big box stores change tax picture
By Naomi Klouda
Homer Tribune
In a year when overall revenue numbers maintained status quo, the Kenai Peninsula Borough stands to benefit from the second year of federal stimulus spending and a new slate of state help in capital projects.
Mayor David Carey, issuing his budget report in talks across the Peninsula last week, said there will be shifts in revenue due to losing tax dollars in BP’s gas-to-liquids plant closure, as well as a down-valuing of Tesoro’s property. Combined, those represent a loss of 4 percent in total property taxes — something Carey called, “a significant loss.”
According to figures provided by Borough Assessing Director Tom Anderson, the total taxable value in the two large industrial facilities at Nikiski show a decrease of $51.8 million from 2009 to 2010. But the decreases were offset some by cumulative increases in the value of other properties in the industrial facilities, Anderson noted.
Even so, the projection set by the borough for incoming property tax revenue in 2011 is $30.4 million. In 2010, it was $30.2 million. The total budget passed is $73 million this year.
Another shift comes in the form of new faces in the retail economy of the Peninsula, which pay both property and sales tax. WalMart opened in March. The borough will see its sales tax revenue figures the first time in July.
“We really don’t know yet how that will figure in, so we budgeted conservatively. It may be better than we thought, but if you don’t know, it’s best to keep the numbers low,” Carey said. The big retail stores — WalMart, Lowe’s Hardware, Home Depot, Fred Meyer’s and Spenard Builders — tend to pay the largest portion of sales tax to the borough. Exactly how much in solid figures isn’t broken down for the public, Carey said.
“Fred Meyer’s appears to be the largest retail taxpayer on the Peninsula, but technically we aren’t allowed to give numbers for each,” he added. Some $26.5 million in 2010 revenue is to come from sales tax.
The tax holiday on non-prepared foods for nine months of the year has granted consumers some relief, while resulting in an estimated $2.8 million loss in revenue for the Kenai Peninsula Borough.
Carey said this keeps more money in the pockets of citizens. If the revenue had been part of the picture, however, he would have liked to see it go to pay for education or in a lowering of the mill rate, which he advocated at lowering by .34 mills.
As it is, his own staff budget took the deepest cut of 16.2 percent by eliminating one full-time position. This comes by cutting the economic analyst position after the person who held the position for many years retired.
With $5 million alloted in spending on road improvements granted through legislative appropriation this year, several of the borough’s 630 miles of road should see improvements. More millions in state spending is set for major portions of the Seward Highway.
A bond package of $17 million goes before voters in October; the money would go for new school roofs across the district. The schools — built in the mid-’70s and ‘80s — are in serious need of deferred maintenance. This is an opportune time for bonding, Carey contends, because the state is offering 70 percent reimbursement on the principle at the same time as the federal government offers a 45 percent reimbursement on interest. This cuts the bond by $11 million to repay,” Carey said. “Either way, this has to be done. But this way, we will have help. If the bond package isn’t approved, we still have to do the job and it will cost the full amount.”
Since a 2002 bond will be repaid by the time the new one takes place, there won’t be a rise in mill rates to pay it off.
“We’ll be trading the old bonds for the new,” he said.
The borough sits with $19.5 million in reserve, which is in the range recommended by the Borough’s fund balance policy of being between $12.8 million and $22.1 million.
Another matter soon to be discussed by the Borough Assembly is whether the borough should switch to a manager form of government, foreswearing the current strong-mayor system. If an ordinance is approved by the borough after introduction July 6, the question will be put on the ballot for voters to decide.
“In December of 1963, in the first election, voters were asked if they wanted a mayor or a manager form of government,” said Carey, a longtime political science professor at Kenai Peninsula College. “They voted two-to-one for a mayor system. Certainly now, 47 years later, it’s valid to ask the people again, which do they prefer.”
Now 20 months into his three-year term, Carey has grown philosophical on the question that could make his job a merely ceremonial one. Assembly members took up the question of switching systems last year, and declined to pursue it at that time. Then, Assemblyman Charlie Pierce, of Sterling, who last year voted along with other members to not pursue the idea, has now renewed plans to place the question on the October ballot for voters to decide.
Still left unanswered is the question of how much a borough manager position will cost, with benefits and contracted severance pay.
At the request of the Homer Tribune, Carey answered questions about his own salary, which is decided by the assembly.
He indicated he is paid $80,000 a year. His salary, as an elected official, includes no vacation or sick time. He is part of the Public Employee Retirement System.
A look at borough salaries includes clerks who receive higher pay than the current position of strong-mayor, who is both administrator of the borough and its public official. A typical borough manager salary, including benefits, would be closer to $200,000 per year, according to similar positions in other parts of the country.