Kenai Peninsula schools face up to $9.4M swing on gas-line tax question

The Kenai Peninsula Borough stands to gain or lose up to $9.4 million a year in school funding obligations depending on which version of HB 381 survives conference committee, according to a Legislative Finance Division memo.

Legislative Fiscal Analyst Alexei Painter projects the borough's incremental Required Local Contribution rising from $2.5 million in FY33 to $9.4 million by FY40, the final year in the memo's table, under the Senate Finance Committee version. That version pulls 13 percent of Alternative Volumetric Tax revenues into the school-funding formula. The House version excludes that revenue entirely.

Painter also flags that the Senate Finance Committee version's timing language is ambiguous. The mill rate calculation uses a two-year lag tied to property values, but no equivalent timing is specified for the AVT. Painter recommends that if the Senate Finance version is adopted, the timing be specified in bill language or resolved through regulation.

A Senate floor amendment sunsets the Required Local Contribution on AVT revenues five years after the Phase 2 final investment decision, which Painter models at January 1, 2027. Because AVT production revenue would not arrive until partway through FY31, and the formula uses a two-year lag, no payment would be due before the provision expires. "This would mean that no RLC is ever paid before the section is repealed," Painter wrote, "meaning that it may effectively match the House version."

The conference committee has not announced a resolution.