When Borough Manager Michael Powers was asked to add nonprofit funding to his budget while also reducing the overall budget request, it meant finding a $1.2 million reduction solution.
The biggest reduction: Cut the community development department and planning and zoning commission.
Assembly members on May 20 asked borough staff to return with a budget that added $370,000 in funding for nonprofits. They also asked to reduce the manager’s budget from $6.2 million to $5.4 million. Nonprofit funding includes $200,000 for Kodiak College, $85,000 for health-care-related nonprofits and $85,000 for education-related organizations.
“We cut stipends across the board, we cut travel and training across the board … we went through and cut everything we could to reduce our operating budget expense,” Powers said.
Community development was the logical choice to implement cost cutting, he said, because it isn’t used broadly. Several other things were cut or reduced as well, such as eliminating stipends for assembly members and commissioners, $5,000 consolidation committee funding and the $15,000 associated with printing the popular binder mailed to borough residents.
“Many jurisdictions use land use and zoning as a driver of economic development and driver of aesthetics in their community,” Powers said.
He noted past discussions involving even minor changes to people’s personal property met with significant resistance.
“We’ve had, over the past five-plus years, discussions of even eliminating building codes, and a large sense of public testimony on a variety of topics has pretty much been summarized as, ‘It’s my property and I kinda want to do whatever I want with it,’” Powers said.
Assembly actions over several years have recognized that sentiment, he added.
Slashing the community development budget from $685,815 to $67,100 would mean a sharp reduction in salaries and benefits while eliminating overtime, continued education, travel per diems, and boards and commissions.
Powers stressed, however, that the process would also mean amending or adopting ordinances, or other options. Such actions would also require legal review to ensure compliance with state law.
Eliminating community development would also reduce permitting and zoning processes to a manager’s review and approval.
“In real-world terms of what that would look like, is if you have a house and it burns to the ground, and you want to rebuild the house within all the setbacks, the manager would review the application and sign it off,” Powers said.
He warned the process would “not be pretty and not provide anywhere close to the type of review that the assembly and planning and zoning commission are used to.”
Powers also advocated not spreading cuts across every department.
“Having worked in a jurisdiction that has done that as well as inheriting a jurisdiction that has done that, it doesn’t work,” Powers said. “What you end up with is a bunch of departments that are all performing in a substandard manner.”
Assembly Member Aimee Williams noted that her original intent in asking for a budget change was to allow borough staff to determine their own priorities.
“When this (report) came back and I read the slashing of an entire department, I was surprised by that and kind of disappointed because I didn’t see what was going to happen,” Williams said.
She added that it doesn’t look “like a success on how to run a government at all.” Reducing most community development processes to a manager-level review and approval “seems unrealistic.”
While Assembly Member Julie Kavanaugh appreciated Powers’ amended budget assessment, she called eliminating the community development department surprising.
“I agree with the comments that if you weaken every department, you end up with a dysfunctional borough government,” Kavanaugh said.
However, removing community development would require multiple ordinance changes. Kavanaugh asked if staff had researched associated costs. Powers said any associated costs would largely be staff preparation and assessing the legal ramifications of any changes.
“I would think less than $20,000, plus printing any amendments to go into the code or paper copies we keep on hand,” Powers said.
Kavanaugh asked, based on past public reaction to proposed ordinance changes, whether such amendments would pass. Powers said he would assume if the assembly passed the budget, they would also approve any such amendments. However, he added there are no legal mechanisms to require the changes.
“In theory, you could create orphans by not taking actions on the codes that are necessary,” Powers said. In turn, there would be no money to address any issues “and by that point your options would get rather interesting.”
While legal challenges exist, as long as the borough follows state law, changes would be hard to challenge.
Assembly Member Geoff Smith asked if department managers were consulted in the process; Powers confirmed it had been a team effort.
“I don’t think the slashing of an entire department is a way to go, but I do feel empowering the borough manager and staff to present their best look at it is a step in the right direction,” Smith said.
Assembly Member Duane Dvorak criticized the proposed cut.
“You can talk about unbridled economic development that might accrue from no regulation, but if you have a junkyard in a residential area or are living next to a convenience store or 24-hour lodging facility you might think differently,” Dvorak said.
He added that quality of life is more than just new projects — it’s supporting already existing elements.
“That’s what community development is really looking at, the stability and value of property,” he said. “The market has really gone up in this community … that represents wealth for people that hopefully can benefit from when they go to sell.”
He added that the assembly should have made legislative changes instead of relying on extreme budgetary actions.
“What I don’t think we should be doing is sitting here at the eleventh hour, budgeting something that should have been legislated,” Dvorak said.
Dvorak added that while it could look like a borough government, “it could just be a hollow facade, a clapboard building you walk through and there’s nothing there.”
While he noted no year was ever good to raise taxes, some people have stated publicly that quality of life at some point costs money. He added he proposed to introduce a mill rate increase at the June 3 regular assembly meeting.
“I’m not convinced we can cut our way to a balanced budget and still do what we took an oath to do on this assembly,” Dvorak said. “If you want nice things, you have to pay for it.”
Assembly Member Scott Arndt asked why Kodiak College’s JumpStart program needed $200,000 rather than the $50,000 provided in the past. Jacelynn Keys, the college director, noted the program has strict requirements imposed to help the money stretch, such as having a minimum GPA, and being limited to first-time freshmen who must go a complete year, or to high school students up to six credits.
Those who have a hard semester or have to withdraw, whether for personal or family reasons, will not be able to benefit from the JumpStart program again.
An increased amount, she said, would allow for more students and the creation of a “second chance fund” to allow students who had a hard first year to requalify.
“There is skin in the game financially and for them to perform and earn good grades,” Keys said. “We would love to reach out to students who opted out because we know life happens.”
Kodiak Island Borough School District Superintendent Larry LeDoux also noted the importance of college access for high school students. Numerous students in the 2021 class earned hundreds of thousands in scholarships, in part because of college courses. He added that the school district will be examining the use of CARES Act funding to help contribute on its end to help with JumpStart.
Arndt commented that it showed three entities — the college, the borough and the school district — participated in funding the program. However, he added he couldn’t support anything above $100,000, and suggested examining two years worth of data for the next budget cycle.
“To me, that is far more prudent than throwing money at it,” Arndt said. He added he could not support cutting stipends or the consolidation committee, or gutting the community development department. He proposed instead to look at driving up revenue for the tobacco excise tax, which has been underperforming.
Arndt also supported supplementing a shortfall in fisheries severance taxes with COVID money.
“Are we taking a gamble? Yes we are,” he said. “If you look at everything, we’re taking a gamble on the severance tax every year, but that’s part of the budgeting process — it’s a fluid document. … It’s our best guess at this time.”
Borough Mayor Bill Roberts noted a vibrant community requires certain things, “but cutting huge chunks out of our government is not making it an attractive community.”
Roberts noted that while many people might see the borough as bloated, it instead is “getting rid of positions we really should have,” such as its human resources or land managers. On the community development front, he noted some leases the borough penned have been so broad “people are doing things with public lands they shouldn’t be doing.”
“If we are going to be a viable community, we need to be a vibrant community,” Roberts said. He added that while he didn’t want extra taxes, “you have to figure out how to fund the government and you can’t say you keep cutting until there’s nothing left.”
With no zoning or planning to keep things in control, he said the island’s quality would go down.
“This is our community, we better give a damn, and sometimes that means we have to pay for it,” Roberts said.
Powers reiterated that borough staff did not believe dismantling any department was a good idea.
“You tasked us at the eleventh hour to reduce the budget by 20%,” Powers said, adding there has been no substantial budget since the end of February on the draft manager’s budget. “Staff will do everything in its power to support the efforts of the assembly to tackle this.”
He added in his five years as borough manager, it’s the same budgeting process used every year, “much like the state Legislature to force the issue at the eleventh hour.”
Powers said he was not casting blame at the assembly and the budget process “was a culture thing.” He encouraged the assembly to begin budget discussions much earlier this year. He added that had he known from his budget that it would be $5.4 million as requested at the May 20 meeting, it would look much different than “an eleventh hour” request.
“Quite frankly, you are making it impossible for your staff to carry out your wills until the eleventh hour,” Powers said. “It’s a disservice to you, a disservice to the staff and the community.”
Assembly Member James Turner countered that the lack of budget discussions should be laid at those who plan meetings, adding he’s sure the assembly has asked for budget information and discussion since February.
Roberts, on the other hand, noted it was on numerous work session agendas “and I had to pull teeth to get people to comment on it.” The assembly, he said, sets the parameters and the staff must make it work.
Smith reiterated his goal to introduce a mill rate increase, and if Powers’ revised budget needed to be included, he would see it as an opportunity.
The borough will continue budget discussions at a special work session tonight at 6:30 p.m. to further discuss the budget prior to its regular meeting Thursday night at 6:30 p.m.