Borough Popular Annual Financial Report

Fiscal year ending June 30, 2016

About the Borough 1

Letter from the Mayor 2

Elected Officials 3

Borough’s Quick Facts 4-5

Property Tax Dollars 6-7

Photos from Around the Borough 8-9

Dollars In Governmental Fund Revenues 10-11

Dollars Out Governmental Fund Expenditures 12-13

Primary Government Financial Statement 14-15

Debt: What We Owe 16

Glossary 17 Table of Contents of Table

Photos courtesy of Rachel Parra, Carla Salzer, Anderson Fannon, Julie Craig, Mandy Stahl-Redder, Amy Mitchell, Fred Perez, Sarah DesOrmeaux, Melissa Brown, Lauri Jensen

About our Borough The Kenai Peninsula Borough lies directly south of Anchorage, the State's principal population center. The waters of the Gulf of and Prince William Sound border the borough on the south and east with the dramatic Chigmit Mountains of the bordering the borough to the west. The divides the borough into two land masses. The Kenai Mountains run north and south through the peninsula, contrasting to the lowlands lying to their west. The west side of the Inlet is sparsely inhabited, with the village of Tyonek being the largest populated settlement. The boundaries of the borough en- compass a total of 24,752 square miles, of which 16,075 square miles are land. In comparison, the total land mass of the borough equals that of Massachusetts and New Jersey combined. However, the total bor- ough population is just less than 58,000. There is a Borough-wide gov- ernment based in Soldotna, consisting of a strong mayor and an as- sembly of representatives from all areas of the Borough. The Borough collects sales and property taxes and provides services such as road maintenance, waste collection facilities, emergency services and major funding for public schools. 2016

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Message from Borough Mayor Mike Navarre,

Dear Kenai Peninsula Borough Residents,

We are pleased to present the Kenai Peninsula Borough’s (KPB) Popular Annual Financial Report (PAFR) for the 2016 Fiscal Year.

This is the third year a PAFR has been published by the KPB. The report is designed to present a condensed, user friendly, overview of the Borough’s financial position, financial practices and additional details outlining how KPB revenues were generated and spent over the last Fiscal Year. The financial information in this report is taken from the independently audited financial statements that are part of the KPB’s 2016 Comprehensive Annual Financial Report (CAFR), re- quired by Alaska statutes. If you are interested in more detailed information, current and histor- ical budgets and CAFRs are available on the KPB website at the Finance Department homepage.

A special thank you goes to the dedicated staff of the KPB’s Finance Department who recognized the value of a condensed financial report and contributed the hard work and diligence required to prepare the re- port. The Kenai Peninsula Borough has been awarded a Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Associ- ation for the last 36 years, an accomplishment we’re rightly proud of achieving and again due to the ex- traordinary work of our Finance Department staff.

As you review the 2016 Popular Annual Financial Re- port, please feel free to contact us with questions, con- cerns, opinions or recommendations. We’ll use your feedback to improve future reports.

Mike Navarre Mayor

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2016-2017 Assembly Members

Dale Bagley Brandii Holmdahl 325 Endicott Drive PO Box 2204 Soldotna, Alaska 99669 Seward, Alaska 99664 Phone: 398-1865 Phone: Email : [email protected] Email: [email protected] District: 4- Soldotna District: 6- East Peninsula Term Expires: 2019 Term Expires: 2018

Blaine Gilman Gary Knopp 216 Susieanna Lane 50465 Patrick Drive Kenai, Alaska 99611 Soldotna, AK 99669 Phone: 398-0840 Phone: 283-9494 Email: [email protected] Email: [email protected] District: 2- Kenai District: 1- Kalifornsky Term Expires: 2017 Term Expires: 2017

Paul Fischer Wayne Ogle PO Box 784 50160 Birch Grove Street Soldotna, AK 99669 Kenai, Alaska 99611 Phone: 262-9269 Phone: 690-1308 Email: [email protected] Email: [email protected] District: 7- Central District: 3- Nikiski Term Expires: 2019 Term Expires: 2019

Kelly Cooper Willy Dunne PO Box 404 40508 Waterman Road Homer, Alaska 99603 Homer, Alaska 99603 Phone: 299-1519 Phone: 299-6226 Email: [email protected] Email: [email protected] District: 8- Homer District: 9- South Peninsula Term Expires: 2017 Term Expires: 2018

Stan W. Welles PO Box 485 Sterling, Alaska 99672 Phone: 260-6769 Email: [email protected] 2016 District: 5- Sterling/ Funny River Term Expires: 2017 3

Quick Facts The Kenai Peninsula Borough was incorporated in 1964 as a second-class borough under the authority of the State of Alaska Borough Act of 1963. The Borough's gov- ernmental responsibilities are comparable to those of a county. The five first-class and home-rule cities in the borough are Kenai, Soldotna, Homer, Seldovia, and Sew- ard. Other locally governed communities include Kachemak City and the native vil- lages of Tyonek, Port Graham, and Nanwalek. Geography Fire Stations Land 16,075 square miles Nikiski 4 Bear Creek 1 Water 8,677 square miles Anchor Point 2 Government Central Emergency Services 8 Kachemak 2 Mayor and a 9 member assembly Calls Responded to by 3,662 Demographics KPB Services Residents 57,763 911 Calls answered 28,165 Median age 40.6 Solid Waste Median Household Income $63,099 Landfills 8 Community Development Transfer Sites 13 River Center Refuse Collected ~ tons 60,318

Human Services (Component Units) Recreation

Central Peninsula Hospital Major Programs 9 South Peninsula Hospital Roads Maintained Miles 641 2016 4

Kenai PeninsulaKenai Peninsula Borough Borough - -Organization Organizational Chart Chart

Citizens

Assembly Service Area Clerk Mayor Boards Legal

Election Records Planning Commission

Human Finance Resources

Financial Property Tax Sales Tax Custodial Copy/Mail Risk Services and Collections

IT Planning 911 Solid Waste Purchasing Assessing and Contracting

River Center GIS Land Maintenance Capital Appraisal Projects

Service Areas

North Seldovia Roads Nikiski Fire Bear Creek Anchor Point Peninsula Recreational Fire Fire & Recreation Emergency

Seward Bear- Central Kenai South Kenai Nikiski Central Central Creek Flood Peninsula Peninsula Seniors Emergency Peninsula Hospital Hospital Emergency Services Kachemak Emergency

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Property Taxes - The Borough bills and collects its own property taxes as well as those of the 5 incorporated cities within the Borough.

Navigating your tax bill:

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Public Safety Education

Community Solid Funding Waste

$63.9 million $18.8 million dollars provided dollars provided for Education in for Public Safety, 2016, the equiva- $2.0 million dol- Emergency Man- $7.8 million lent of 8.00 mills lars provided for agement and E911 dollars provided Senior Citizens dispatch services. for Solid Waste $48.3M ~ KPBSD and other Com- $0.7M ~ Emergen- facilities opera- munity Programs (Operations and cy Management tions, capital other related ex- and organizations projects and debt penditures) throughout the $2.1M ~ E911 service. $0.7M ~ KPC Borough. Dispatch/Services $6.0M ~ Opera- $10.8M ~ Capital $947,294~ Senior $13.8M ~ Fire & tions Emergency Medi- $4.1M ~Debt Centers cal Services $1.8M ~ Capital $30.1M, 100% of $502,876~ Reve- Sales tax revenues nue Sharing $.8M ~ Disaster Funded by $5.3M go to Education as relief in property tax- well as $26.5M in $67,500~EDD es, $.8M in user property taxes and $1.1M ~ Capital $339,954~KPTMC fees, $1.7M in $7.3M in bond bond proceeds proceeds and grant $0.3M ~ Debt $50,000~Carts revenues. and grant reve- nues. $80,440~SBDC

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2016

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Dollars In….. Governmental Fund Revenues Funding for the Kenai Peninsula Borough government and the ser- vices provided to residents comes from many sources, with the ma- jority coming from Property taxes and Sales Tax, which totals 84% of

all revenue collections for the General Fund. Grants being the second

largest revenue source makes up 13%.

The Borough’s General fund and Other Governmental funds also re- ceives revenue from charges for services, grants, investment income and various other revenues streams. In total, FY 2016 revenues de- creased by $3,498,000 when compared to FY 2015 due to reduced grant revenues. Other Governmental Fund Revenues

(Includes Services Areas*) Where the Money Comes From Comes the Money Where

* Amounts are expressed in dollars.

* Service areas and Special Revenue Funds include: Nikiski Fire, Bear Creek Fire, Anchor Point Fire and Emergency Medical, Central Emergen- cy Services, Kachemak Emergency Services, Lowell Point Emergency Services, Central Peninsula Emergency Medical, North Peninsula Recrea- tion, Seldovia Recreation, Roads, Land Trust, Seward Bear Creek Flood, 2016 Environmental Protection Program, Disaster Relief, 911 Communica- tions, Nikiski Senior, Miscellaneous Grant Fund. 10

General Fund Revenues

* Amounts are expressed in dollars.

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* Service areas and Special Revenue Funds include: Nikiski Fire, Bear Creek Fire, Anchor Point Fire and Emergency Medical, Central Emergency Services, Kachemak Emergency Services, Lowell Point Emergency Services, Central Peninsula Emergency Medical, North Peninsula Recreation, Seldovia Recreation, Roads, Land Trust, Sew- ard Bear Creek Flood, Environmental Protection Program, Disaster Relief, 911 Communications, Nikiski Seniors, Miscellaneous Grant * Amounts are expressed in dollars. Fund. 12

Dollars Out... Governmental Fund Expenditures The Borough provides a range of services, including fire and emergency med- ical services, recreational programs and activities, road maintenance, permit- ting and education to maintain and promote valuable fish and wildlife habi- tat, map books, land use permits, and solid waste programs. General Government - supports all borough offices and departments that

serve the public. This includes public information, intergovernmental rela- Where Money The Goes tions, creating and implementing the borough’s policy, assessing and collect- ing taxes, and managed of the borough budget. Education - provide operational funding for the school district and Kenai Peninsula college, through cash contributions, in-kind services, maintenance of facilities, utilities, insurance, audit fees, and custodial services. Public Safety - provide fire protection and emergency medical service, and rescue capabilities to the citizens of the borough. Solid Waste - operate solid waste facilities and programs to ensure waste is managed in accordance with borough code, and state and federal requirements.

Roads/Trails - provide road maintenance for roads within KPB road service area. Land Trust - to maintain land inventory and issue land use permits. Recreation - provides recre- 2016

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Government Wide - Balance sheet

The Kenai Peninsula Borough’s Balance Sheet depicts our financial condi-

tion as of June 30, 2016. The balance sheet is a summary of what the Borough owns (assets) and owes (liabilities). The balance sheet excludes fiduciary funds as well as hospitals and school component units. Total net position is the difference between total assets (what we own), including deferred outflows, and total liabilities (what we owe), includ- ing deferred inflows. In FY 2016, Total assets increased more than the increase in total liabilities causing an overall increase to total net posi- tion.

Primary Government Financial Statement Financial Government Primary 2016 14

Primary Government Financial Statement

Government Wide - Income Statement

The Kenai Peninsula Borough’s Income Statement (Statement of Activities) re- flects our financial activity for the fiscal year end June 30, 2016. The Income

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The Borough’s primary government debt is comprised of General Obli- gation Bonds: 1. General Obligation– debt backed by the Borough. As of June 30, 2016, the debt is issued through the State of Alaska’s Bond Bank, their current rating is AA.

Total Outstanding debt *

Debt ~ What We Owe What ~ Debt We

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The following terms are used in this report and are defined below.

Assets - what the Kenai Peninsula Borough owns.

Capital assets - items such as Borough land, construction in progress, equipment, infrastruc- ture and buildings, and improvements net of depreciation.

Current and other assets - items such as cash and investments, receivables, internal balances, inventories, deposits with others, prepaid items and deferred charges.

Deferred inflows - an acquisition of net assets by the entity that is applicable to a future re- porting period.

Deferred outflows - a consumption of net assets by the entity that is applicable to a future reporting period.

Fiscal Year (FY) - accounting period covering 12 consecutive months, July 1 to June 30 for the Borough.

Governmental activities - Borough based services, including fire, public works, sanitations, economic development, and culture and recreations. Sales, use and property taxes finance the

Glossary majority of these services.

Invested in capital assets, net of related debt - amounts invested in capital assets less accu- mulated depreciation and any outstanding debt used to acquire these assets.

Liabilities - what the Kenai Peninsula Borough owes.

Long-term liabilities - items such as bonds, loans, compensated absences, and other Borough obligations.

Net position - the difference between the Kenai Peninsula Borough’s assets and liabilities. It is the net worth of the Kenai Peninsula Borough.

Other liabilities - items such as payables, payroll, accrued interest and unearned revenue.

Primary Government - all of the governmental and business type activities belonging to the Kenai Peninsula Borough, but excludes the discrete component units and fiduciary funds.

Restricted- funds that are not available for use because they have been set aside for a specific purpose or project.

Unrestricted - available funds. 2016 The purpose of this report is to provide an overview of the financial position and operations of the Kenai Peninsula Borough, as reported in the borough’s Comprehensive Annual Report (CAFR), along with other information of interest. The financial information presented is unaudited and condensed form, and does not substitute for the Borough’s CAFR. The Borough’s CAFR is prepared in conformity with generally accepted accounting principles (GAAP) Included in the CAFR is the independent Auditor’s Report by BDO USA, LLP on the general purpose financial statements of the Borough. This report summarizes nearly 148 pages of the CAFR’s financial and statistical data. The financial statements condense information of all funds included in the “Total Primary Government.” GAAP requires certain financial presentation and disclosures which are omitted in this report. As a result, the Balance Sheet and Income Statement presented here are not in strict conformity with GAAP. The Borough’s CAFR and Annual Budget have received awards for outstanding financial reporting from the Government Finance Officers Association. The CAFR and the Annual Budget reports are available on the Borough’s website http://www.borough.kenai.ak.us/finance-dept/finance-home

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KENAI PENINSULA BOROUGH

144 North Binkley Street Soldotna, Alaska 99669

Toll-free within the Borough: (800) 478-4441

Phone: (907) 714-2170

Fax: (907) 714-2376

www.borough.kenai.ak.us