Assembly reviews manager's FY26 budget: PILT, Maptor, facilities fund, insurance and landfill costs under scrutiny

Assembly members and staff spent the May 8 work session reviewing the Kodiak Island Borough's proposed FY26 manager's budget, with a focus on revenue assumptions and specific fund lines including federal PILT, severance taxes, the facilities renewal-and-replacement fund, and enterprise funds for the landfill and long-term care center.

Manager Amy told the assembly that the preliminary budget is balanced on current revenue estimates, but several large revenue items remain uncertain or timing-dependent. The borough is budgeting $1.7 million for federal PILT (payment in lieu of taxes), an estimated $700,000 for seafood severance taxes, and $900,000 for fisheries business tax. Amy noted that some federal and state receipts have not yet been received and will appear later in the year.

Maptor and local tax capacity: Finance director Dora explained that the borough's ability to raise property-tax revenue is constrained by the maximum-allowable-property-tax-revenue framework (referred to in the meeting as "Maptor"). She said the borough can adjust mill rates within that cap and that bond debt is handled separately from Maptor calculations. Assembly members asked staff to model different mill-rate choices and the effect on the borough's capacity to support the school district request.

Facilities fund: Staff summarized the facilities renewal-and-replacement fund and noted $21.8 million has been used in recent years for insurance, debt service and capital projects. The borough currently projects about $1.37 million in interest for the facilities fund and has changed rules to allow up to 50% of that interest for debt service in some cases.

Insurance and risk: Staff warned the assembly about pending changes in the municipal insurance market. A proposed merger of insurance pools (AMLJIA and APEI/APRA referenced in the meeting) may require updated building valuations and could increase premiums or change payout formulas; staff said valuation updates could be costly for smaller communities and create large swings in property-insurance expense.

Landfill and solid-waste funds: The assembly reviewed the solid-waste enterprise fund, which includes landfill operations and a leachate-treatment plant. Staff laid out revenues (dump fees, metals recycling, penalties) and expenses (personnel, baler maintenance, hazardous-waste handling). The fund currently carries a modest unreserved balance ($303,510 as reported), and staff recommended continued examination of rates and capital needs; the FY26 manager's budget proposes using $144,592 of the fund balance to balance operations.

Long-term care center and other enterprise funds: Staff presented the long-term care center enterprise fund, showing lease payments and contingency planning for equipment replacement and debt-service costs. Assembly members asked about contingency balances and whether previous contingencies had been spent; staff said unspent contingency stays in the enterprise fund as fund balance.

Tourism and commercial-passenger-vessel receipts: The tourism-development fund (accommodations tax) and commercial-passenger-vessel (cruise-ship) fees were reviewed; staff noted that cruise-ship receipts vary sharply by season and vessel routing, and the FY26 manager's budget uses conservative historical figures.

Debt service and school bonds: The manager's packet includes bond-payments and a projected reduction in bond payments beginning in 2026 because several bonds will be paid off; the packet also shows a reduced assumed school bond reimbursement from the state (manager's level 2 reflects an anticipated 75% reimbursement rather than full reimbursement) that would increase the borough's local debt burden.

Next steps: Staff will return to the assembly with modeled revenue options (mill-rate changes within Maptor) and with any updates that emerge from insurance-valuation work or state revenue changes. Assembly members flagged the need to plan for multi-year capital- and equipment-replacement needs, rather than rely on ad-hoc budget amendments in times of crisis.

Ending: Managers and department leads said they will present more detailed figures and proposed rate adjustments (if any) at the regular meeting and in the public hearing process set for early June.