The Kenai City Council passed an ordinance that will increase the authorized transfer amount from the Airport Land Sale to the City’s Airport Fund for FY22. The increased amount is possible because earnings were higher than projected for calendar year 2021.
Terry Eubank, Finance Director, told the Kenai City Council:
“Each year we estimate through the budget process what the projected earnings of the city’s permanent funds are going to be and then at the end of the calendar year, which is halfway through of our fiscal year, about probably 8-9 months after we make those original estimates, we get to see how good my estimates are. I’m wrong every year, just so everybody knows. In this case, the calendar year 2021 earnings were in excess of what was projected when the budget was put together. This increase in the appropriation of the transfer from the permanent fund, in this case, from the airport permanent fund to the airport and in the case of Ordinance 3272 from the general land sale permanent fund to the general fund just maximizes the allowable amounts that we can transfer out of those funds to the operating funds. That’s the purpose of these two ordinances.”
Eubank states that the December 31, 2021, 5 year-average market value of the portfolio ($26,993,044) was below the inflation adjusted principal ($28,397,622), thus the allowable transfer is limited to the lower bound of the spending rate (3.8%). The 2021 allowable transfer based upon this calculation is $1,025,736. The FY22 budgeted transfer amount was $1,012,722. This Ordinance will increase the budgeted transfer amount to the maximum value of $1,025,736, an increase of $13,014.
The Ordinance passed the Kenai City Council.