Kodiak City leaders expect services to the community to be maintained at current levels into next year, although the expense of paying for them will likely increase. The city council unanimously approved a fiscal year 2026 budget Thursday night, June 26.
This fiscal year [FY’2026] the city budget expects roughly $49.2 million in combined revenues excluding capital projects; a slight increase from last year. Expenses are expected to come out to $56.8 million which requires the city to use additional monies from its capital projects funds in order to balance the budget.
According to budget documents, nearly $3 million will also be taken out of the city’s fund balance, also known as its savings, this fiscal year to cover the extra costs. The proposed FY'2026 budget still maintains enough money in the fund balance to cover approximately 3 months of operating reserves, at $6.35 million.
As councilmember Bob Stanford noted during Thursday’s meeting, the city is focusing on many improvements at a time when other communities statewide and nationally are facing cuts and reductions.
“There’s a lot of unknowns that are going forward for the year, but this budget is heavily leaning on capital projects," he said. "And if you read the first sentence, it says that FY’26 budget recommends $7.8 million in additions to capital projects and includes 11 new capital projects.”
The $7.8 million would support several ongoing capital projects, like upgrading the water treatment plant’s system, replacing the ice rink roof and the planned abatement of the Griffin Memorial building.
Employees' salaries, wages and benefits continue to be the single largest expense in the city’s budget at 48% of total expenses, according to documents from finance director Julie Liew. That includes a reduction of 8 full time employee positions from last fiscal year to this one, from 142 FTEs in fiscal year 2025 to 134 FTEs in fiscal year 2026.
For example, $7.3 million is budgeted for the Kodiak Police Department, mainly to cover salaries and benefits for uniformed patrols, corrections and other officers, such as dispatch or animal control. That’s roughly $1 million more than FY’2025’s adopted budget, which had $6.4 million in the budget for the police department.
On top of funding the city’s departments and staff, this year’s fiscal year budget also includes formal recognition of the roughly $600,000 the city annually contributes to local nonprofits.
“The city annually allocates over $200,000 in grant funding to local nonprofits to support community programs and services," acting city manager Josie Bahnke explained. "The city also provides approximately $400,000 of in-kind contributions each year to include water and sewer utilities, the use of land and buildings and also rent subsidies.”
During fiscal year 2025, the city gave $202,500 as contributions in addition to $200,000 to Discover Kodiak and $9,500 to the Chamber of Commerce. That did not account for the approximately $400,000 the city gave to nonprofits through in-kind contributions.
To pay for all of it, the city plans to rely on its largest revenue source – taxes.
Last year [FY’2025] the city collected just over $13.2 million in property and sales taxes. This year [FY’2026] the city expects more than $17.7 million in tax revenue, the majority of that coming from the local 7% sales tax.
The mill rate will remain at 2 mills, as it has for decades, which means $2 per every $1,000 of a property’s assessed value will be owed as property tax to the city.
The mill rate and new budget goes into effect on Tuesday, July 1, at the start of fiscal year 2026.
