Assembly reviews general fund revenue projections, PILT, facilities fund, insurance and solid‑waste costs

Borough finance and management staff led an extended review of the FY26 manager’s budget revenue assumptions and several special revenue and enterprise funds, including discussion of federal PILT and refuge payments, facilities fund balances, insurance cost uncertainty tied to a possible merger of insurers, and the landfill/solid‑waste budget.

Manager Amy and Finance Director Dora walked the assembly through line‑item revenues and assumptions. Key points included a manager’s estimate to draw $2,270,000 from property tax, $252,628 from personal property tax, and an expected $1,700,000 in federal PILT (payment in lieu of taxes). The packet listed an expected $180,000 in a National Wildlife Refuge shared revenue payment; staff explained that calculation is opaque and the payment typically posts in June.

On resource volatility, staff highlighted that fishery (sea product) severance tax receipts vary by season and that timber and mining receipts depend on specific shipments and market conditions. Staff said severance receipts are budgeted conservatively and that revenues historically concentrate in later quarters of the fiscal year.

Several assembly members raised federal PILT and refuge payment levels as a structural revenue concern for Kodiak, given large federal land area and a relatively low population base; the manager said she and the mayor have lobbied NACo and U.S. senators on PILT increases.

Facilities fund and capital reserves: staff noted the borough has used about $21.8 million from the facilities fund in recent years (roughly $3.2 million for insurance, $10.3 million for debt service and $8.3 million for capital projects) and explained current rules allow use of up to 85% of interest earnings with up to 50% eligible for debt service. The manager said changes to how much of renewal and replacement interest is applied to debt service could help balance the FY26 budget.

Insurance and risk: staff warned a proposed merger of two municipal insurance providers (AMLJIA and APEI) could materially increase property insurance premiums because the merged entity may require up‑to‑date property valuations and would change payout rules. Under one insurer’s current model, replacement payouts are limited to a capped percentage; under the other, full replacement can be paid if the insured value is accurate. Staff said those valuation updates could drive large premium increases and that the borough has invited insurers to evaluate properties locally, but those evaluations will not be completed before the FY26 budget must be adopted.

Debt and bond items: staff pointed to the school bond reimbursement estimate and a manager’s level‑2 budget reflecting possible reductions from the state (assembly packet showed a level‑2 projection of $3,186,000 for school bond reimbursement assuming 75% reimbursement rather than 100%). The bond worksheet in the packet showed several principal and interest payments and noted payoffs that may reduce future bond payments in FY27.

Enterprise funds: staff reviewed the long‑term care center lease and contingencies and then detailed the landfill and leachate treatment plant budgets. The solid‑waste budget anticipates revenues from Alaska Waste, the Coast Guard and metal sales, but also expects to use roughly $144,592 in fund balance to balance FY26. Staff discussed capital needs including potential dump truck replacements (two trucks from 2008 and 2010), baler maintenance, critical spares and an extended‑reach forklift option. Assembly members questioned whether to pre‑fund equipment replacement and staff explained depreciation and fund balance mechanics for enterprise funds.

Staff also previewed the third quarter budget amendment, the FY26 budget introduction and tax roll certification timing. The manager said several items in the manager’s budget will change before final adoption as assembly direction and outstanding valuations/insurance updates are received.

No formal votes occurred during the work session; the assembly will take up budget adoption, mill rate setting and tax roll certification at upcoming meetings with public hearings scheduled before statutorily required adoption dates.