Kodiak City Council work session. Jennifer Canfield photo
At last night's Kodiak City Council work
session, City Manager Aimee Kniaziowski gave an extensive report highlighting
the proposed 2013 budget. In it she addressed many of the concerns that were
voiced at a meeting two weeks ago during which the council introduced an
ordinance that would increase the sales tax from six percent to seven percent.
city is struggling to cut just over $2 million from its FY 2013 budget to avoid
drawing from the fund balance. The council is currently debating an ordinance
that would increase the sales tax to seven percent and increase the tax cap
from $750 to $3500. It's estimated this would bring in an additional $2.7 million.
city manager offered a few other scenarios that would help the city close the
funding gap. Reducing the sales tax to five percent and eliminating the tax cap
would bring an estimated $2 million. So would increasing the sales tax to seven
percent but increasing the tax cap only to $1500.
from adjusting the sales tax scheme, eliminating the senior citizens sales tax
exemption was also discussed. Cutting the senior exemption would bring in
$640,000 to the city, or about one-third of the current budget shortfall.
city currently pays the healthcare premiums for its employees. It's a huge
expense that continues to skyrocket. Council member Terry Haines said that
balancing the budget might mean taking extreme steps such as cutting employee benefits.
some point we're going to have to realize that the writing on the wall is there
and we may have to make some painful decisions like removing a large part of
our healthcare benefits for our public employees. Those kinds of costs are
things that we can't predict year after year, we know they're going to rise and
we know from past experience that the benefits that we are getting are
remaining static and the costs continue to rise up and up. I think that's
exactly the kind of thing we need to look at across the board."
Mayor Pat Branson agreed that cuts to non-essential services would need to be
considered, but that employee healthcare wasn't one of them.
like to have a little time to look at this and analyze and ask some more
specific questions as to non-essential services, like Mr. Haines was saying,
maybe the benefit outweighs the cost. Healthcare, I'm not so sure about. That's
a different arena as far as I'm concerned. You can't keep employees without
offering healthcare of some sort."
council- while motivated to find a solution to its budget shortfall- decided to
postpone a vote on the ordinance. Council member Gabriel Saravia emphasized
that this is a problem that needs to be addressed soon.
need to take action as soon as possible.
Five years ago we had the problem and we have the same people that
oppose it. I don't want to pay taxes either myself, or for the city council to
fall apart and we don't do something. I want to do something, I don't know
what. I want to do something to fix the problem and not pass it to my kids or
your kids five years from now and by that time we're bankrupt and have to close
the entire city. People like it or not, we have to come to an agreement to do
whatever has to be done."
member John Whiddon said that making sustainable changes to the budget over
time might be the best solution to align spending with revenues.
could well be that we don't solve it all in 2012. It could be that it takes us
two to three years to get to a point where we have a sustainable budget that
doesn't draw down on the fund balance. I don't think we should necessarily fix
everything in the first year. I think it might be it takes a couple of years to
get where we need to go, but also knowing that the fund balance will be gone in
two or three years. That's another consideration, too, that we don't try to
catch up to that $2 million in one year. Maybe we should do it in a way that moves
us to that goal but in a very, very precise way."
public hearing on the proposed sales tax increase is scheduled during the
council's next regular meeting which is this Thursday at 7:30 p.m. in the
Borough Assembly chambers. The meeting will be broadcast live on KMXT.