Petersburg looks at property tax increases, funding cuts

Property owners in Petersburg may have to pay more tax next year under a budget proposal being considered by the borough assembly this spring. The proposed spending plan also eliminates borough funding for mental health services and several other organizations. The assembly Monday advanced the borough budget in its first reading without any changes.

Borough officials hope to get assembly approval to increase the property tax rate around half a mill for people who live within the old city limits of Petersburg, and just under that for property owners in the rest of the borough. For someone who owns a 200-thousand dollar home, the increase would be around 100 dollars a year.

Those increases could help offset a potential cut in the state reimbursement for local school construction bonds. The money could also help the borough with the potential loss of federal funding for the schools, namely the Secure Rural Schools payments that go to municipalities near National Forest Land.
Borough finance director Jody Tow explained the impact from that potential loss of federal money.

“We’re just trying to reduce our reliance on the Secure Rural Schools funds for the 1.8 million that we fund the school,” Tow explained. “So this current year that we’re in we used $500,000 of secure rural schools fund. So as we decease that we’re increasing the amount of property tax needed to fund the school.”

The mill rate is set by the borough assembly later in the spring. Local officials are still hopeful the Secure Rural Schools program will be reauthorized by Congress. The borough has stock-piled past payments and only used a portion of the money to make it last longer. The budget for the upcoming year makes no cut to the local contribution to the school district.

Jeigh Stanton Gregor said the budget was not perfect but praised the work of borough staff. “Our finance director Jody and all the admin staff has worked extraordinarily hard to create a reasonable budget to keep Petersburg working to keep the standard of life and services that we’re used to in effect,” Stanton Gregor said. “I just want people to know that none of this has been done flippantly or without diligent thought. As a community I want to thank people for their patience as we all work through this process. It’s more than challenging to say the least.”

With those rate increases, the borough anticipates an increase in property tax revenue and total revenue of just over nine and a half million dollars in the borough’s general fund. The budget is balanced with the same amount of spending in those departments and that’s a decrease overall from the current year. The borough has budgeted 231-thousand dollars in money from the local tobacco tax and also anticipates the first marijuana tax be collected in the upcoming year. Money from sales tax is expected to drop slightly from the current year. That’s despite two questions on sales tax exemptions likely heading to the ballot in October.

Chamber of Commerce administrator Mara Lutomski told the assembly that chamber members who met on the topic last week did not want those questions on the ballot this year. “We believe it’s unlikely that these new taxes will be supported by the voters as these news taxes if they are passed will cause unnecessary burden on an already-struggling business community,” Lutomski said.

The assembly went ahead with the second reading of an ordinance to send the two issues to the ballot. Voters would be asked whether the borough should increase the sales tax cap from 1,200 dollars to 5,000 dollars and whether to remove an exemption for goods and services purchased here but shipped elsewhere. An amendment to take out the tax cap increase did not have enough votes.

Other changes in the proposed borough budget are in the community services portion of spending plan. KFSK would see an increase in its borough funding, from 19,000 this year to 35,000. And the Clausen Museum would receive flat funding of 42-thousand dollars.

The budget proposes to cut the 55,000 dollars paid to Petersburg Mental Health Services in the current year. That amount was already cut from $85,000 the year before. PMHS director Susan Ohmer asked the assembly to add funding back into the budget. Ohmer said the loss of borough money would mean that the mental health service provider would have to prioritize for the most extreme cases.

“We will need to begin limiting our services to people considered state priorities as these cuts happen,” Ohmer said. “State priorities include people who are actively suicidal, they’re substance abusing, they’re schizophrenic or they’re a child who’s difficulties are so severe that they may be removed from their home or the community. Everyone else is considered general mental health and our state funds cannot provide support for serving those people.”

Ohmer said mental health has received money from the borough for at least 22 years. She thought the loss of local funding also would impact PMHS’s ability to apply for state grant money and asked for just under 69,000 from the borough. The community services portion of the budget also has no funding proposed for payment in lieu of taxes for the city of Kupreanof, or money for WAVE or Mountain View Manor food service.

Another local resident, Susan Erickson lobbied for funding to replace the lights in the swimming pool. That 85-thousand dollars is in the Parks and Recreation department budget.

The biggest capital project in the budget is a more than half million dollar remodel of the Power and Light building downtown.

In other budget highlights, staff has proposed cuts to travel and training expenses in the police and fire departments. A new part-time computer specialist position is proposed and the electrical department is planning to fill a lineman’s position that has gone unfilled in recent years. An amendment to remove funding for an electrical department lineman failed on a 2-3 vote with only mayor Mark Jensen and Bob Lynn voting in favor.

The budget passed on a 5-0 vote. Cindi Lagoudakis was not at the meeting and Eric Castro had to leave earlier on in the meeting. At the end of the meeting Kurt Wohlhueter called for some meetings on the budget for later this year.

“Not necessarily a task force but maybe some town hall meetings, designated solely for ideas on how we can bolster our income or lower our output, or expenditures, but I think the community really needs to get involved in this and I know in the past it hasn’t been very successful and I’ve beaten my head against the wall in the harbor board trying to get people to participate and like you say a lot of times we just have to make those decisions,” Wohlhueter said.

The budget has two more readings before it becomes the spending plan for the local government for next year. The public hearing on it will be at the assembly’s next meeting May 15th.