HomeMy WebLinkAbout2022-01-10 Council Minutes - Work SessionCouncil present:
Others present:
A. Call to Order
KENAI CITY COUNCIL WORK SESSION
FY2023 BUDGET GOALS
JANUARY 10, 2022-5:00 P.M.
KENAI CITY COUNCIL CHAMBERS
210 FIDALGO AVE., KENAI, AK 99611
MAYOR GABRIEL, PRESIDING
NOTES
B. Gabriel, H. Knackstedt, J. Baisden, T. Winger, J . Glendening , G . Pettey,
D. Sounart
City Manager P. Ostrander, Finance Director T. Eubank, City Clerk S.
Saner, Fire Chief T . Prior, Police Chief D. Ross, City Attorney S. Bloom,
Senior Center Director K. Romain
Mayor Gabriel called the work session to order at 5:00 p.m.
B. Introduction -Mayor Gabriel
Mayor Gabriel noted the purpose of the work session was to review, discuss and provide
guidance to the administration regarding goals for the development of the FY2023 budget.
C. Public Comment
There was no one wishing to be heard.
D. FY2023 Budget Adoption Goals
City Manager Ostrander noted that the administration established goals annually for the
development of the budget and including the Council to develop the goals would ensure the
FY 2023 budget development is in alignment with the goals of the Council; and this process
was an additional opportunity for the budget process to be transparent to the public.
Finance Director Eubank stated the goals included a broad statement of purpose which
identified the intent of the City to produce a fiscally responsible budget; the importance of
considering the needs and priorities of the community; and ensure that fees and tax rates are
sufficient to provide services without resulting in excessive reserves.
Goals #1 : Submit a budget for consideration which maintains the City 's current mill and
sales tax rates which is also compliant with the General Fund , Fund Balance
Policy as codified in KMC 7.25.
Finance Director Eubank outlined the importance of maintaining the current mill and sales tax
rate , stating the use of reserve funds for one-time expenditures is good; however, use of the
reserve funds for ongoing expenses is not a sustainable process.
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January 10, 2022
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There was d iscussion on revenue streams; the fund balance policy as a best practice to
ensure the City maintained sufficient funds ; and establishing a fiscally responsible budget
without increasing the mill or sales tax rates.
Goal #2 : Propose salary schedule adjustments commensurate with inflation as measured
by the Alaska Consumer Price Index for All Urban Consumers. second half over
second half to the extent possible while meeting the City's Fund Balance
Policy/Goals with no increase in the rates of taxation or reduction in services.
Finance Director Eubank identified the most significant costs to the City is personnel noting
that traditionally the City has matched the Consumer Price Index (CPI); and, stated the
adm in istration is looking for direction from the Council regarding the salary schedule .
There was discussion regarding the compounding effect of inflation, costs for benefits, health
care, and increased costs for goods resulting in a possible increase in sales tax revenues;
there was consensus for the administration drafting a budget as close as possible to include
the CPI without a mill or sales tax increase.
Goal #3: Improve the sustainability of and maintain the quality of employee medical,
dental and life insurance while continuing toward an employee cost share of
15%; a process that began in FY2021 and continued in FY2022 by increasing
the employee cost share 1 % per year. A 1 % increase in the employee cost share
for FY2023 would bring the employee's share to 13%.
Finance Director Eubank stated that the City is incurring 88% of employee healthcare costs
and those costs are escalating at a far faster pace than inflation; the City is in its third year of
increasing the cost to employees at 1 % each year to bring it up to 15%; however, there is
need to develop a more sustainable option .
There was discussion regarding the cost to the City per employee; pooling with other
municipalities; the need to remain in a full insured plan; higher deductibles and health savings
accounts; and establishing goals related to a commitment from the City to work with
employees to reduce costs for healthcare.
Goal '1#4 : Seek opportunities for efficiency by striving to reduce the cost of goods and
services without negatively impacting operations .
Finance Director Eubank noted this would be reaffirming the commitment from the City
employees that we are always looking for ways to reduce costs through efficiency initiatives.
There was discussion regarding the local vendor preference and how it did not apply to grant
funding; and examples of efficiency initiatives recently administered by City staff.
Goal #5: Compile a li st of capital projects, projects costing $35,000 or more, for Council
adoption. The investment in maintain ing infrastructure over time should at a
minimum equal the depreciation , an accounting process by which the cost of an
asset is spread over its useful life, recorded annually on City capital assets and
infrastructure.
Finance Director Eubank stated the investment into infrastructure over time should be a
minimum equal to depreciation, an accounting process by which the cost of an asset is spread
over the use of its life.
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January 10 , 2022
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There was discussion regarding how this goal supported the capital plan process; established
the amount of funds the Council should be looking to spend in certain areas ; and the option
of taking bonding issues to the voters.
Goal #6: Adjust rates, charges and fees in all funds commensurate with inflation as
measured by the Alaska Consumer Price Index for All Urban Consumers, second
half over second half. The monthly rents at Vintage Pointe should not increase
more than $35.00 per month over FY2022 rates for existing tenants as of June
30, 2022.
Finance Director Eubank stated this goal addresses other rates , charges and fees that are
not contractually driven .
There was discussion regarding the consequences in future years if the cost of living increase
was not applied in the current year; support for the $35.00 per month Vintage Pointe rental
increase to ensure the rentals are at market value ; and the administration bringing forward an
updated fee schedule.
Goal #7: For the Airport, Water & Sewer, Personal Use Fishery, and Congregate Housing
Funds, the proposed budget should project ending fund balance/retained
earnings of at least 50% of the FY2022 budgeted expenditures net of any
projected lapse and any use of fund balance should be for one-time or capital
purchases and not for reoccurring expenditures/expenses.
Finance Director Eubank noted that there is a formalized fund policy for the general fund;
however, there was no formalized fund policy for the airport, water and sewer, personal fishery
or congregate housing . This goal would establish similar standards for use of reserves within
these funds limiting deficit spending to one time or capital expenditures .
There was consensus that the application of this standards was a responsible way to manage
the funds.
Goal #8: Senior Citizen Fund fees and rates should be adjusted to a level sufficient to limit
the increase in required transfer from the General Fund to no more than a 10%
increase, $22,052, over FY2022 amounts.
Finance Director Eubank clarified that the Senior Citizen Fund is for activities at the Senior
Center and is separate from the operations of Vintage Pointe; although significant funds were
received from the State and Federal Government for the Senior Center, the general fund is
used for any shortfalls . This goal would establish an overall transfer of not more than 10%
($22,000).
There was discussion related to what action would be needed if the goal was insufficient;
increased meal counts; and a possible change in funding from the Kenai Peninsula Borough
based on census data regarding the senior population .
Public Comment
Suzie Smalley spoke in favor adjusting residential water and sewer rated based on the square
footage of a home; and that she would be in support of bonding efforts to improve the City
even if she were to move away.
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January 10, 2022
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E. Council Discussion
Council Member Winger stated her appreciation for the goals brought forward a nd thanked
the adm inistration for their hard work.
Council Member Glendening stated his appreciation for looking at infrastructure depreciation
and involving the Council early in the budget process.
Council Member Baisden stated the goals were a good place to start considering the
difficulties related to all of the increases coming in the long term; and it would be good if the
City were able to handle the increases without needing to increasing revenues.
Council Member Knackstedt stated any budget has unknowns, inflation is an additional
unknown; the vehicle replacement program has worked well and the same is true with other
equipment and infrastructure.
Council Member Sounart thanked the administration for their work, and thanked Mrs. Smalley
for her comments.
Council Member Pettey stated the work session was very informative; we as a community are
facing challenges with the consumer price index and rising medical costs; and noted her
appreciation for this being brought forward.
Mayor Gabriel stated he liked the idea of the administration taking a lead on this process,
some of the goals maybe challenging; however, having goals provides a context and when
those goals are not met it provides an opportunity to identify why they were not met.
F. Public Comment
G. Adjournment
The work session adjourned approximately at 7:20 p.m.
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January 10, 2022
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