Petersburg is paying off debt from constructing the community swimming pool, completed in 2006, through 2026. (KFSK file photo)

Petersburg’s borough assembly Monday decided to wait on raising property taxes but approved a budget with the higher tax rate built in. Local officials are anticipating the loss of state reimbursement for school project debt but want to wait as long as possible before raising the tax rate to cover that loss.

Petersburg is facing the potential loss of 469,000 dollars a year in state reimbursement for school projects and the swimming pool. Governor Mike Dunleavy has proposed ending that reimbursement. A proposed increase in local property tax would make up for that. The 15 percent increase would only be for property owners within the old city limits. Under that change, the tax bill on a 300,000 dollar home would go up more than 500 dollars a year.

Assembly member Bob Lynn wanted to wait.

“I’ve got some concerns about raising the mill rate in service area one to cover the bond debt that we might have to do,” Lynn said. “Whether we have a decision by the governor on Thursday or not I don’t know but it’s worth a chance to wait and have a special meeting to look at that in my opinion.”

Tax bills normally are sent out by July 1st. Borough code sets a deadline of June 15 for the assembly to pass a budget, otherwise spending is set at 80 percent of projected revenues. Jeigh Stanton Gregor thought it made sense to wait on the tax rate but pass a budget with the full assembly in town.

“My only concern with it is I highly doubt we’ll have seven of us again with the way the season is beginning right now and it’s the final reading of the budget and we have an obligation to the citizens to make sure one gets passed,” Stanton Gregor said. “Call me pessimistic just for the sake of argument but if we have four people here who can’t agree on one piece of that budget we don’t have a working budget at that point. I just want to make sure we can find a workable way to honor our commitment to the citizens of Petersburg and get a budget passed appropriately.”

The tax increase isn’t the only option to make up for the state reimbursement. Borough finance director Jody Tow said the borough could spend money from other sources, including a federal payment under the Secure Rural Schools act for counties near National Forest land. But she cautioned that these payments would have to be repaid to those funds because the federal payments are made to the entire borough population and the school projects have only been approved by voters within service area one.

School superintendent Erica Kludt-Painter told the assembly that the school district could be forced to spend its reserves this summer if a disagreement between the governor and the legislature over school funding winds up in court. She was also concerned with using the borough’s Secure Rural Schools money to pay for that school project debt.

“While I can’t really control what happens at your level and how you choose to do that, the pot of money that we always know we have set aside is that Secure Rural Schools money,” Kludt-Painter said. So if we’re talking about utilizing that for a number of different issues to help keep things moving forward it can only go so far and I know we’re all interested in maintaining that fund balance as much as we possibly can.”

The borough uses Secure Rural Schools payment to cover a portion of its annual contribution to the school district for operating expenses.

The assembly agreed to wait passing the resolution that actually enacts the property tax hike. But they did agree to vote on the third and final reading of the borough budget assuming that higher tax rate.

“You know for me it’s just like the governor and the legislature have kind of backed us into a corner and this is kind of the only responsible thing we can do to kind of take care of our financial house,” said assembly member Jeff Muecci. “And by doing this we take care of ourselves. Not too concerned about what the governor does but, I mean, I’ve said from day one that we can’t really say what the governor or the legislature is going to do but we certainly can take care of our own stuff by dealing with this amendment to the ordinance so I’m going to be voting for this.”

The budget change to reflect the higher tax rate passed unanimously. The assembly also voted on a couple other changes to the spending plan. One change directs borough staff to wait on filling two vacant positions, one in the police department and one in the fire department, until the assembly gives it final approval on those hires. It was a 6-1 vote on that amendment with mayor Mark Jensen the only opposition.

Assembly member Taylor Norheim tried to reduce pay for assembly members from $150 a meeting to $75 a meeting. The pay amount for the mayor and assembly is set in borough code and would take an ordinance to change. However Norheim’s motion would have changed the budgeted amount for that borough spending.

“I just think if we’re really trying to save money here why would we cut from I don’t know the radio station three thousand dollars out of their budget but then you won’t cut here?” Norheim wondered. “I mean, 75 bucks, it’s not a lot of money. You’re not deterring anybody from doing this,” he said of serving on the assembly.

“I don’t get paid vacation,” said assembly member Brandi Marohl. “So every time I come to any meeting, I take time off, whether it’s during the day, whether it’s a special meeting or not. So not all of us are self-employed. Not all of us have jobs where we get vacation time or whatever else. And no I didn’t take this job because I get $150 a meeting but it helps balance things out.”

Assembly member and remote resident Lynn also said he used his pay to cover the travel costs to skiff into Petersburg for meetings. That change failed on a 4-3 vote with Norheim, Meucci and Kurt Wohlhueter voting for it.

The overall budget with changes eventually came up for a vote. Mayor Jensen was against several items still included in the spending plan.

“The first one is the EMS position, the second is the police position and the third is for the Petro land swap so I will not be voting in favor of this budget as amended,” Jensen said. He was the only vote against the amended budget and it passed in its third and final reading 6-1.

The assembly agreed to meet again on setting the property tax rate Friday, June 21 at 4:30 p.m.