Mat Su Borough FY 15 Budget Outlook

The Borough administration’s various departments made their budget presentations to the Matanuska Susitna Borough Assembly on Tuesday. April 15.

 Borough manger John Moosey told the panel that the upcoming fiscal year’s Borough overall income would take a hit from a 20 percent reduction in state revenue sharing

“Revenue sharing is about a one million dollar hit. So it’d be a million dollars this year. That million dollar decrease is planned for in this budget.”

Moosey said that increased up-front costs associated with the state’s PERS retirement plan and changes in how the state reimburses PERS contributions will impact Boro spending accounts. He said plans are to eliminate one administrative position next fiscal year.

However, Moosey told the body, ‘..we have a lot for other people to be jealous of.’    He outlined Borough FY 14 successes in projects involving schools, roads, fisheries, recreation and the Port MacKenzie rail spur.

Among the Borough’s fiscal challenges, expenses for the upkeep of Port MacKenzie loom large. Moosey defends port development, especially in light of recent state legislative and budget developments regarding the Knik Arm Crossing. “We have to pay attention to port development”, he said.

According to Port Mackenzie director Marc Van Dongen, the proposed FY 15 port budget is less than the current fiscal year’s port budget. The total port budget of 915,708 dollars includes 135 thousand dollars in power bills anticipated this year, due to new electrical systems scheduled to be constructed at the port this year. The work itself is being paid for by a state grant.

Van Dongen told the panel that projected revenues from port usage have not materialized, due to delays in the coal production that initially were expected to keep the port in business. He said that the Port had not paid for its keep since 2008, when a gravel shipping project brought in more in than 800 thousand dollars into Borough accounts through royalites and wharfage and docking fees.

According to Van Dongen, the Port cannot generate enough revenue to meet expenses until the Port MacKenzie rail spur is up and running

“When that rail line is completed and we are shipping three million tons or more of commodities or combination of commodities, that will generate gross revenue of about five million dollars a year and net revenues of over four million dollars a year. That’s what we have been working toward for fourteen years, is to get to the point where we get the rail line completed and can officially import to the port large volumes of commodities via rail.”

He told the panel that Port MacKenzie has been successful in securing a three month project for the port this summer to receive and load 14 miles of concrete covered pipe for shipment to Nikiski. But he said the Port needs another three million dollars from the state legislature to pay for needed cathodic protection work on it’s pilings. And the last two miles of gravel road leading to the port still have to be paved. Van Dongen said there was a little over 900 thousand dollars left over from a state grant to pave the port road, but that would be barely adequate to complete the project. One Assembly member asked what would happen if the state took that 900 thousand back. Van Dongen said then the Borough could not finish the road paving.

Other setbacks include a US Army Corps of Engineers halt on wetlands permits the port requires to complete piling and electric work.  Van Dongen said it’s important to keep that 900 thousand in the Borough.

“It’s important that we retain those funds. We need a half a million to pave that last half mile, and we need 283 thousand to pay for the mitigation. That would come out of that 907 thousand .  There’s a freeze on our permits. The Corps is not letting us process any permits, and there’s three permits I need to be processing now, that are on hold until we satisfy that mitigation.”

The mitigation Van Dongen refers to is an agreement the Borough makes with the Corps to pay for wetlands purchases to compensate for wetlands impacted by the rail spur project.

Van Dongen said that four segments of the rail spur construction are underway, but two segments remain. He said 171 million dollars has been spent on spur construction so far, but another 101 million dollars is needed to complete the final two segments. The plan is to ask the state legislature for that money over three years. Van Dongen said Borough fiscal officials estimate the Port loses 400 thousand dollars a year, but that will be paid back to the Borough general fund when the rail spur is completed.