Assembly lowers mill rate

MAT-SU -- The Mat-Su Borough Assembly passed a $169 million budget Tuesday, with funding included to add organized financial setbacks, reorganize the borough's public safety division, fund education to the state cap and to establish a set reserve account.

To fund the budget, the assembly passed a mill levy of 11.702 mills, 1.4 mills lower than last year's levy. Residents outside the city limits of Palmer, Wasilla or Houston will pay an additional non-areawide mill rate of .443, in addition to any road or fire service area mill levies applicable their their area. For the average borough homeowner, based on the borough-wide average property assessment of $134,000, that would mean an annual payout of $1,628.05, as compared to last year's assessment of $1,806.72 for areawide and non-areawide mill levies.

The move toward a formal policy of setting aside a certain percentage of the borough's unexpended fund balance is, in part, what allowed the assembly to make changes to the budget while still reducing the mill levy.

The formal policy initiated Tuesday will mandate that one-quarter of the areawide budgeted expenditures -- except school district expenses -- will be set aside to maintain a favorable borough bond rating.

Between 1996 and 1999, according to information from the borough finance office, the borough's areawide outstanding fund balance was used to pay for budgeted services, allowing the mill levy to be lowered. That practice, borough finance director Tammy Clayton said, put the borough in a dangerous predicament.

"Our fund balance was in a deficit position and we had to turn it around because it affected our bond rating," Clayton said.

According to an informational memorandum included with a resolution to set the policy into borough ordinance at the May 21 meeting, the practice of utilizing fund reserves downgraded the borough's bond rating. The downgrade meant the borough was not able to sell general obligation bonds at a competitive rate. But the assembly and administration recently agreed to work toward boosting the bond rating and giving the borough a stronger financial position.

"By increasing our bond rating, the cost of financing and thus, the cost borne by the taxpayers decreased," the memorandum states.

Clayton said by laying out the practice of setting aside one-quarter of the budget, the assembly will be able to retain a good bond rating while knowing exactly how much must be set aside in the fund balance.

"It had been a policy," Clayton said. "Instead of just having this policy … we formalized the whole process."

The formalization of the process means the assembly has nearly $6 million in funds currently in excess of the 25-percent fund reserve. Those funds were used as a one-time mill levy reduction, although borough manager John Duffy said it's likely using all the funds as one big reduction will necessitate a higher mill levy next year.

"Frankly, if you go down to 11.7 [mills], you will be increasing the mill levy next year," Duffy told the assembly before they voted for the reduction.

A second mill rate of 12.25 was on the table during the budget meeting, but was amended to the lower mill rate in a 4-3 vote. The higher mill rate would have been sustainable for two years, Duffy said, because the nearly $6 million excess fund balance would have been rolled back into the budget over that two-year period.

Assembly member Kelly Lankford Ladere said she believed reducing the mill levy all at once could provide incentive for diversification.

"I'm hoping this will put some applied pressure on ourselves," Ladere said. "and that we broaden our source of revenues, rather than just relying on property owners."

The assembly funded two additional reserve accounts at Tuesday's meeting. An emergency response reserve of $750,000 was established to provide financial resources in the case of natural or human-caused disasters. That money, Clayton said, could only be spent if an emergency is formally declared.

The second reserve account was created to provide emergency funding of one-time capital expenses or site-selection costs.

"The assembly has just set a budget to cover us through June 2003," Clayton said. "There may be an opportunity for a grant for a project, and that grant may require a match."

This fund, she said, could provide emergency match money for unexpected grants. It would also be unspendable without the assembly's approval.

The assembly agreed to the manager-proposed adjustments to the borough's public safety department structure, with a few minor changes. Ladere proposed an amendment to add $40,000 for numerous items related to additional training and equipment. Ladere changed her amendment to specifically outline numerous areas she would like the money to go, but that motion failed. A second amendment, offered by assembly member Jody Simpson, directed the money toward training and equipment specifically. That amendment passed, with Ladere and assembly member Talis Colberg opposed.

The assembly also agreed to fund the borough school district to the maximum allowed by state law for the second year in a row. Nearly $30.86 million was allocated for school district funding, an action that took place without debate or amendments, but with significant comment from borough residents in favor of full funding. Kris Forrester, the district's director of career and technical education, said full funding last year gave the district a much-needed boost in legitimacy.

"It opened many doors in the legislature for us to be able to say we were funded to the cap," Forrester said. "The full funding you gave us allowed us to have programs that have gained national accreditation."

Overall, the budget passed with fewer than 30 amendments and little deliberation, except over two amendments offered by outgoing assembly member Dan Kelly. Kelly suggested an increase in assembly wages from approximately $500 each month to $1,500 each month. He reasoned that the assembly had formerly received $1,000 each month, but that amount was halved several years ago. In the meantime, the assembly has been asked to make more decisions and spend more time discussing weighty issues.

"To ask for funds to be the way they were in the past is really an insult," Kelly said. "If we want to have elected officials in here and have them come to the table and do a good job, they really need to be compensated somewhat better than we have in the past."

Kelly said his primary reason for offering the amendment was because he doesn't plan to run for his seat a second time and has instead elected to run for the Wasilla mayor's seat.

Assembly member Sara Jansen agreed with Kelly that $6,000 each year is not a large sum, but said she wasn't willing to triple the salary. She instead offered an increase of $250 per month, taking the monthly payment up to $750. Jansen added that it had been 11 years since the last time the assembly had voted on a potential raise.

But assembly member Talis Colberg said $6,000 each year does not accurately reflect what the assembly is receiving for compensation.

"We, in fact, have a huge medical benefit," Colberg said. "The reality of it is, the benefits are substantial with this job."

Jansen's motion failed with assembly members Bruce Bush, Jansen and Kelly in support. Kelly's motion also failed, with his sole support.

Kelly later offered an amendment that would increase the mayor's budget a total of $23,653, but that amendment failed with only Jansen in support after Mayor Tim Anderson said he neither requested nor supported the amendment.

When the budget ultimately passed with unanimous support from the assembly, several assembly members commented on how smoothly the process went.

"It was a very smooth budget," Anderson said.

"It's a good day to be on the Mat-Su Borough Assembly," Jansen agreed.