Fairbanks North Star Borough administration presents $206.97 million FY2026 budget, plans $9.5 million draw from reserves

Mayor Bryce Hopkins and Chief Financial Officer Joanne Pascoe presented the Fairbanks North Star Borough's proposed fiscal year 2026 budget at the Assembly Finance Committee meeting on April 3, recommending a $206,974,740 comprehensive budget for the period July 1, 2025, through June 30, 2026, and an estimated area-wide mill rate of 10.887 mills.

The mayor's message included a pledge that "The FY26 budget maintains current levels of service while staying within the borough's tax revenue cap," and Pascoe told the assembly the recommended plan includes a general fund contribution to balance the budget. "We are taking a $9,500,000 draw from fund balance to balance the budget," Pascoe said during the question-and-answer session.

Why it matters: The package would raise the area-wide mill rate 0.288 mills from FY2025 and represents a roughly 5% increase in the overall FY2026 budget compared with the FY2025 approved budget. The proposal also increases the borough's direct contribution to local education to $60,000,000 from $58,000,000 in FY2025 and relies on a draw from reserves to balance projected revenues and expenditures.

Key figures and proposals - Recommended comprehensive budget (excluding service areas and grants): $206,974,740. - Estimated area-wide mill rate: 10.887 mills (up 0.288 mills from FY2025). - Proposed increase over FY2025 approved budget: about $9,900,000 (roughly 5%). - General fund draw to balance the budget: $9,495,340 (Pascoe also referred to a $9,500,000 draw during Q&A). - Borough contribution to the school district: $60,000,000 (FY2025 approved was $58,000,000). - Net general fund items increase: nearly $7,000,000; personnel and contractual increases account for substantial portions.

Revenue and reserves: Pascoe displayed revenue charts showing property taxes remain the largest single revenue source (about 64.93% of all revenues except service areas). The presentation notes a projected $4,650,000 increase in total property tax collections across funds and a $761,000 projected increase in hotel/motel room tax revenue. Interest earnings are budgeted lower (down about $540,000) and other state and federal revenues are shown decreased by about $750,000 due to reductions in community assistance funding.

Property tax exemptions and the tax revenue cap: The presentation said property tax exemptions have grown to more than $2,000,000,000 over the past 20 years, with roughly $1,200,000,000 attributed to state-mandated exemptions. Pascoe said the exemptions increase the borough's mill rate by an estimated 1.731 mills compared with a hypothetical without those exemptions. The administration repeatedly emphasized that the borough is operating under the tax revenue cap and described that cap as a limit on tax revenue collection rather than a direct spending cap.

Capital and multi-year programs: The recommended capital and reserve actions include a FY2026 required contribution to the capital improvement program (KIP/NMR) of $12,300,000 (an increase of $913,000), and proposed FY2026 project appropriations from that program. The package includes $8,100,000 of spending from KIP NMR in FY2026. The recommended budget reduces funding for some multi-year programs by about $2,400,000 overall, with specific cuts (for example, $1,200,000 reduced for repair and maintenance/energy reduction programs).

Assembly questions and follow-ups: Committee members pressed the administration on the use of fund balance, how the tax revenue cap is calculated, and what the draw from reserves means for future budgets. Pascoe and Mayor Hopkins explained the $9.5 million draw comes from the general fund unassigned fund balance and said tax-cap calculations (including CPI and new construction) determine available tax revenue for the next year; the administration repeatedly clarified that drawing from fund balance does not change the tax-cap baseline.

Members requested additional detail the administration said it would provide in follow-up materials or future presentations: inflation-adjusted historical charts, vacancy lists (including positions vacant more than six months), counts of lapsed projects and fund balances, detailed explanations of the health and social services match assistance program, and transit ridership data for bus-service funding analysis. Treasury staff indicated James Menacher would present additional grant and program details at a later meeting.

What did not change: The presentation did not include final assembly action or a committee vote on the FY2026 budget during this meeting; the administration delivered the recommended budget and answered questions. The committee scheduled further budget hearings and department overviews at subsequent meetings and public hearings as part of the formal adoption process.

Ending: The Finance Committee continued its review and requested the administration provide the follow-up materials before upcoming work sessions and the scheduled public hearing on the proposed budget.