City employees may not see a cost of living increase this coming year as the city considered that and other measures to create a balanced budget at last week’s City Council budget discussion work session.
If the budget was maintained, the city of Kodiak would be looking at a budget deficit of $3 million.
To bridge that budget gap, the city is considering cuts to the vehicle replacement program, maintaining health insurance premiums for employees, and passing on credit card fees to customers paying their utility and harbor bills.
In lieu of an across-the-board cost of living increase for city employees, however, the city is considering one-time bonuses.
According to a memo from City Manager Mike Tvenge, with these cuts to expenses, the budget deficit would shrink to $300,000, which would likely be covered by the city’s fund balance unless revenues pick up.
On the revenue side, the city is looking at adjusting the sales tax exemption policy, sometimes known as the senior citizen exemption, a policy that says that Kodiak residents over the age of 65 are exempt from paying sales tax. Other items include increasing fees for city services and revising leases for city properties.
Sales tax is the primary source of cash for the city, but due to the COVID-19 pandemic, shrunk by over $7 million, or 50%, last year. Next year, the city estimates that sales tax revenues will recover.
What will next year look like? City Manager Tvenge is optimistic that with tourism increasing, city revenues will increase with it.
“Just look at with what going on recently with vaccinations and such. People are booking travel now, there’s a lot more travel going on and what that means is that people are spending more money. I would think that that next year our sales tax revenue and our other revenues would start increasing and then help budget that balance out again.”
The City Council will formally consider the 2022 budget and take public comment again at their next regular meeting on May 13.