Econ 919: Borough eyes service area fees

Feb 24, 2018

This week, on Econ 919, Kenai Peninsula Borough Mayor Charlie Pierce has been touting his plan to cover the borough’s $4 million-plus deficit this year with no new taxes. But a part of that plan means asking for administrative fees from the borough’s service areas. KDLL’s Shaylon Cochran has more.

The borough used to charge what amounts to an administrative fee for service areas, like the North Peninsula Recreation Area or the Anchor Point Fire Area. But it hasn’t for a while. And now, Mayor Charlie Pierce thinks that’s a piece of the budget gap-filling pie.

“Back in 2016, when we had $20 million-plus in fund balance, there was decisions made related to this expenditure to waive the fee," Pierce said. "We’re looking for revenue to pay the bills, to pay for services. We’re hoping for the approval to implement a 2.5 percent fee. In prior budgets, we had charged as much as 6 percent.”

But service area boards haven’t had much time to figure out what it will mean for their budgets. That’s what Keri-Ann Baker, chair of the South Peninsula Hospital Board, said at a recent assembly meeting.

“My board is not necessarily opposed to this proposal, we just want to understand it. We want a little bit better process,” Baker said.

She said that the first she’d heard about the plan was via Facebook. The memo from the mayor’s office doesn’t indicate how much money the fees would return to the borough’s general fund. In another interview, Pierce said it shouldn’t be thought of as a tax, though in the case of the Funny River Fire Service Area, mill rate adjustments are being made to provide more money in order to decrease response times. The assembly will vote on the proposal at its March 6 meeting.

The country’s oldest LNG export terminal no longer has a license to do business. The LNG export facility in Nikiski was sold last month by ConocoPhillips to Andeavor, formerly Tesoro. And its new owners have let its federal export license expire.

Exports, however, were already sporadic. Conoco had let its own license lapse about eight years ago after international contracts had run their course.

The Cook Inlet oil and gas boom that picked up in 2011 and 2012 provided some incentive to renew the license, though exports never really followed in kind.

In an email, Andeavor spokesperson Destin Singleton said the company bought the LNG facility to “strengthen our integrated value chain by optimizing our operations in Kenai and provide low cost fuel for our refinery,” and they are in the early stages of figuring out plans for the nearly 50-year old facility.

Finally this week, a number, actually a fraction — 0.27 percent. That is how much more Homer Electric Association has been charging us for electricity since Jan. 1. The increase was requested by the co-op from the Regulatory Commission of Alaska, and increases the Cost of Power Adjustment from 6.81 cents per kilowatt hour to 7.08 cents.

The COPA makes up for the cost of fuel Homer Electric has to purchase to generate electricity and is adjusted on a quarterly basis.

So how much will 27 parts of one penny affect you? HEA says that the new rate will mean an increase of $1.51 for an average member using 550 kilowatt hours a month.