Kenai Peninsula Borough committee debates mill-rate changes, Seldovia increase and Bear Creek amendment

The Kenai Peninsula Borough Assembly Finance Committee discussed a resolution to set mill rates for fiscal year 2026 and tax year 2025, including a proposed increase for the Seldovia Recreation Service Area and an amendment to lower the Bear Creek Fire Service Area rate.

The resolution would raise Seldovia’s mill rate from 0.75 to 1.0, a change that Finance Director Brandy Harbaugh said “would generate approximately $23,269.” Assemblymember [first name not specified] Dunn and Mayor Michicky supported the increase as a targeted contribution toward keeping the Seldovia community pool operating while the community pursues longer-term solutions.

Why it matters: mill rates determine local property-tax revenue for borough service areas and affect small, rural service areas differently than larger tax bases. The committee’s discussion focused on the tradeoff between short-term relief for local projects and adherence to borough fund-balance policies that guide long-term fiscal stability.

Committee debate and details Brandy Harbaugh, the borough finance director, told the committee that seven service-area mill rates would decline under the budget proposals while one would increase (Seldovia). She said the Seldovia increase was requested by residents and the local recreation board to support the pool and that the change occurred after the printed budget was finalized.

Assemblymember Dunn said Seldovia residents and the Recreation Service Area Board had pressed for the increase and called the $23,000 “a show of support” while noting the amount alone “is not enough money to keep the pool open.” Mayor Michicky said the request reflected local will and that the borough followed its ordinances on fund balance when setting rates.

An amendment from Assemblymember Eklund would reduce the Bear Creek Fire Service Area mill rate from 3.25 to 3.0. Eklund said Bear Creek voters previously approved a bond in 2007 and expected mill rates to fall as property values rose; she also said the Bear Creek service area “has quite a large fund balance” and that the proposed change was intended to lower property taxes for residents.

Finance director Harbaugh cautioned that Bear Creek is a small tax base and that reducing the mill rate could push the service area out of the borough’s fund-balance policy. She said the budget shows a proposed FY26 spend for Bear Creek of $1,109,641 and that the band for that service area is wider because it relies on limited revenues. Harbaugh added that, under the reduction scenario, the service area would end a later fiscal year with about $497,000 while its minimum fund-balance target is $552,000, and she also noted a recent certified value reduction of about $650,000 for Bear Creek that will slightly reduce revenue.

Several assembly members raised process questions about whether the Bear Creek service-area board had formally recommended the reduction; Harbaugh and Eklund said there had been conversations with current or past board members and that some local residents attended the earlier Seward meeting to ask for a lower rate. Mayor Michicky emphasized the borough’s obligation to follow its fund-balance rules and noted that some other reductions in the proposed budget were made only where service areas exceeded the policy band.

Next steps The resolution was discussed in finance committee; no final committee vote was recorded in the transcript. Committee members noted the assembly’s appropriation power and the ability of members to offer amendments. The item will continue through the borough’s normal adoption process and may appear on the assembly’s consent or regular agenda for final action.