Borough cuts $1 million from KIBSD; continues to mull property tax increase

Kodiak High School. (Photo by Kavitha George)

At their May 21 regular meeting, the Kodiak Borough Assembly held a public hearing and vote on education funding, and introduced an ordinance to increase borough-wide property taxes to meet their bond debt obligations.

After forty-five minutes of public testimony and an additional hour of board comments, the Kodiak Island Borough Assembly, meeting in person for the first time since March, voted 3-2 to reduce the borough’s education contribution to the Kodiak Island Borough School District by over $1 million.

One month ago, KIBSD School Board formally requested nearly $10.5 million, a flat-funded request from the current fiscal year.

Last week, however, the borough manager’s budget proposed a reduction of $740,000 to $9.5 million, and at this week’s assembly regular meeting, assembly person Julie Kavanaugh proposed an amendment to reduce the allocation further, to about $9.4 million, a $1 million reduction from last year.

“I didn’t propose it because I was trying to win something here. I was trying to create a budget that began the steps toward being sustainable.”

Kavanaugh reiterated the budgetary significance of the bond debt.

“Regardless of whether you believe that the state would pay a portion of the debt service for the school, or regardless of whether you you feel the scope of that project was too extensive. We are obligated to make those payments.”

Assembly person Rebecca Skinner defended the additional cut, arguing that schools can educate with less income. Skinner, who graduated from Kodiak High School in 1992, said that the borough contribution then represented a better use of borough money:

“At points in the past the amount of money from the borough to the school district were the closer to the $6 million mark. The year I graduated from Kodiak high school, the borough contribution to the school district was $6.4 million, and there were actually more students enrolled in the district at that time than there are today. And if I’m reading correctly, I believe their entire budget might have been $17 million, so you compare that to, I think there was a Reference to $50 million budget today.”

Adjusted for inflation, the borough contribution of $6.4 million in 1992 equals over $11.5 million today,

Opposing the amendment and speaking in favor of the school district’s request for flat funding was assembly person Schroeder.

“I feel like the fat has gone from the…school district. The fat’s gone. The same on the school district side. Listening to Dr. LeDoux’s reports and reviewing presentations the school district’s done to us, they’ve done an excellent job of cutting costs where ever they can while still providing a good education for our community’s kids.”

Schroeder then proposed using money from the facilities fund to fill the budget gap and avoid raising property taxes.

“The one I am most interested in is taking a loan from the facilities fund. That’s the golden goose which everyone talks about. I used to speak about it a little more casually. When is the rainy day happening? When is that rainy day finally (going to) come? Listening to the tension in people’s testimony, reading the newspapers, and looking around the community, I wonder if this is the community on life support situation that I was looking for, and knowing when it would be right to borrow from the corpus of the facilities fund for pay for a temporary revenue shortage.”

The facilities fund is a $40 million fund, set aside from the sale of Shuyak Island (so it is sometimes called the Shuyak fund) land thirty years ago. According to the Borough’s 2019 Comprehensive Annual Financial Report, interest earnings from the fund can be used for “debt service, building insurance, and capital projects”.

The assembly was divided on if it was appropriate to borrow from that fund to fill the budget gap.

Assembly person Duane Dvorak said, “We’re asked to make a decision tonight, and we don’t have that tool available. And I’m not willing to gamble on something so speculative when we have a dollars and cents decision to make tonight with such gravity to the whole process.”

The assembly voted 2-2 on Kavanaugh’s amendment, with Mayor Bill Roberts breaking the tie in favor of the $9.3 million allocation.

The assembly also introduced the proposed mill rate increase, taking public comment, which was nearly all opposed to the increase.

Local business owner, Jeremiah Gardner, urged the assembly to look elsewhere for money.

“I think that we need to come up with some more creative solutions, as we watch taxes steadily go up here, and a lot of people struggling. I don’t think we could pick a  worse time for a property tax increase.”

Assembly members also declared their opposition to the increase.

Assembly person Scott Arndt said, “I cannot support a mill rate increase. And I will be pushing for 10.75. So I’m just making it known up front where I’m at with the mill rate. And am I willing to compromise on a quarter mill rate? Hell no.” (Note: a previously-aired story misidentified Arndt as Mayor Bill Roberts.)

Even though an additional $5 million from the state’s Community Assistance Program, funded by the federal CARES Act to help stimulate the economy and support local governments, is on its way to the borough, assembly members warned of the unsure nature of how that money can be used.

Assembly person Schroeder said, “The consensus on this assembly in our budgeting work sessions is that we don’t feel comfortable doing that. It’s not the advice we’re getting from our lawyers. That’s not a safe bet. Once again, the state made some assumptions, they made the easy decision and left us holding the bag.”

The assembly will take up the mill rate increase again at their next regular meeting.

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