North Pole mayor's 2027 budget would hold tax rates and add $801,685 in spending

Mayor Larry Terch III recommends a 2027 budget that would keep North Pole's property tax at 1.75 mills and its sales tax at 5.5 percent while raising general fund spending by $801,685. The North Pole City Council takes up the budget for introduction at its 6:30 pm meeting Monday. It would take effect Jan. 1, 2027.

The flat rate keeps a cut made for 2026. The city's 2026 budget book lists the property tax at 3.5 mills for 2023 through 2025, then 1.75 mills in 2026. Budgeted property tax revenue fell from $1.3 million in 2025 to $650,000 in 2026. The 2027 budget sets it at $675,000. City records do not say why or when the rate was halved.

Terch recommends $10.6 million for the general fund, the city's operating budget. Its five departments were budgeted at $9.84 million combined for 2026. Police spending would rise about $493,000, to $3.8 million. Administration would rise about $164,000, to nearly $989,000. Fire would rise about $120,000, to just over $4 million. The clerk and human resources office would rise about $60,000, to about $521,000. Public works would drop about $35,000, to $1.3 million. The police and fire chiefs had proposed 2027 budgets about $640,000 higher, mostly for wages, Alaska News reported Oct. 28.

The budget counts on $6.5 million in general sales tax, just over $1 million in online sales tax and $1.13 million in fees and services. Ambulance service revenue is budgeted at $985,000, up from $850,000 for 2026.

Sewer Fund Gap Persists

The sewer fund is budgeted to take in $1.14 million and spend $1.34 million in 2027, a gap of about $201,000 even after $315,000 in transfers in. Sewer spending has outpaced revenue for years: by about $148,000 in 2024, about $131,000 in 2025 and about $191,000 so far in 2026. The water fund, by contrast, balances at $1.93 million.

Separately, North Pole must find $3.5 million to move its sewage outfall in about 3.5 years or face daily fines, Alaska News reported Oct. 29.

The budget recommends $1.26 million in transfers into reserve funds: $580,000 for capital projects, up from $54,000; $500,000 for the fire vehicle fund, up from $300,000; and $180,000 for the police vehicle fund, up from $60,000. It recommends nothing for public works vehicles. The ordinance calls those reserve budgets "contingent upon council approval of the ordinance reinstating the funding mechanism." No ordinance described that way is on Monday's agenda, and the council appropriation column in the reserve table is blank.

Two related measures from Terch are also up for introduction Monday. One would amend the 2026 budget to move $350,000 from the administration, police, fire and public works professional services lines into the capital projects reserve. The other would send money from selling a department's property into that department's vehicle fund instead of the general fund.

New Surplus Rule and Ambulance Fees

The council adopted an ordinance Oct. 19, on a 4-2 vote, requiring all of any audited surplus above a set reserve to go toward cutting the sales tax, the property tax or both in the following year's budget. Council members Schuster, Williams, Rolfe and Claus voted yes; Skipps and Terch voted no. The reserve is two to six months of operating spending, after the council raised the maximum from four months on Oct. 5. Budget documents must report the calculation. The 2027 budget packet contains no reserve or surplus calculation.

Former Council Members David Brandt and Benny Williams, who sponsored the rule, wrote that money above the reserve "should provide a direct financial benefit to City taxpayers." At the Oct. 19 hearing, Thomas McGhee spoke against lowering the sales tax and proposed lowering the property tax instead. He was sworn in as a council member later that night.

Also on Oct. 19, the council voted 6-0, with Brandt absent, to raise the ambulance fee from $1,100 to $1,300. On Monday it takes a final vote on raising the resident discount on ambulance and emergency medical services from up to 10 percent to up to 25 percent. Sponsors Brandt and Council Member Santa Claus wrote that "adjusting the current discount keeps the current ambulance fees the same for North Pole City residents." On the base fee alone, a full 10 percent off $1,100 comes to $990, and a full 25 percent off $1,300 comes to $975.

After Monday's introduction, the council still must hold a public hearing and an adoption vote on the budget. Records do not set that date. The council's Dec. 7 meeting has been moved to Tuesday, Dec. 1.