Kodiak’s City Council passed a balanced budget Monday night which includes drawing more than $3 million out of the general fund to make up for extra expenses. But the city’s mill rate will not change.
During a special meeting on June 24, the Kodiak City Council unanimously approved the budget for fiscal year 2025. Council member Annika Woods was the only one absent for the budget vote that evening. Projected revenue for the upcoming fiscal year, which starts July 1, is approximately $49 million from all funds, excluding capital projects. That’s up 6.3% from the last fiscal year.
The council approved transferring about $3.3 million out of its general fund balance in order to balance this budget, which means matching the city’s expenses to its projected revenue. That leaves $11.7 million in the fund balance, or roughly seven months of operating reserves. The general fund is used as a municipality’s main operating account and is not considered sustainable to withdraw from to balance the budget on a regular basis.
Councilmember John Whiddon saw this as a comprehensive budget for the city and applauded staff’s efforts.
“And what are turbulent times for us as an economy with our fishing economy, and global national politics. So I think you’ve [the staff] been able to transcend all of those challenges and create not just a balanced budget, but I think a budget that addresses the needs of every department plus increases in capital expenditures," Whiddon stated.
The city’s increased expenses are mainly attributed to major capital projects’ costs, for example repaving Mill Bay Road or purchasing a new ladder truck for the fire department. On the flip side, the budget indicated that the city’s revenue has not increased significantly while expenses continue to rise.
Acting City Manager Josie Bahnke noted in her comments that balancing the budget was challenging but overall easier to achieve this year.
“This conservative budget balances the operating budget including the increased sales tax allocation of $1 million to streets/roads, $1.5 million to the harbor, and $500,000 to Baranof Park," Bahnke explained.
Revenue from local sales tax has gone up dramatically over recent years, in part due to the surge of online sales. The city is expecting to take in over $17 million in sales tax for the next fiscal year, 2025.
According to budget documents, city employees’ salaries, wages and benefits account for the single largest expense in the annual budget, making up 43% of all spending. To pay for the 141 positions funded in the FY2025 budget, the city is estimating costs to be $12.3 million.
The upcoming fiscal year budget also includes keeping the mill rate at 2 mills, which has stayed the same since 1985 according to the city's finance department.