The Kodiak City Council is considering paying bonuses to city staff while holding off on pay raises until the next fiscal year.

During fiscal 2022 budget discussions, the council directed City Manager Mike Tvenge to come up with an appropriate number for a bonus to give staff immediately, in lieu of giving them a cost-of-living adjustment this year. 

The bonus would come out of the 2021 fiscal budget and be paid for with surplus funds from COVID-19 economic aid the city received. 

Although the surplus amount was not disclosed, Tvenge said there was “indication” that it would be higher than the cost-of-living adjustment for employees, which was estimated to be about $609,000. 

The idea to offer bonuses came out of discussions about raising staff wages to meet the market rate for job positions in an effort to stay competitive with other employers and cities in Alaska. 

Tvenge said the city would conduct an internal review to update each job description and match them with updated wage amounts. The review would likely take several months, and was expected to be completed in the fall. 

He said the last time a similar wage study occurred was 2012. Since then, job duties have changed, along with the city council’s priorities and the services that city staff provide for the community. 

To come up with the numbers, staff would do an internal study and compare starting salaries and benefits to other communities of similar size and standard of living to Kodiak. 

“If we do a compensation study, some may not see that full increase,” Tvenge said. 

The internal compensation study will be reviewed by a third party and added to the budget at a later date, once the increased wages have been established.

Originally, the city had estimated a budget deficit of $1.8 million primarily from the wage increase. It would have required an appropriation from the city’s General Fund to balance the budget. That number was decreased to $1 million after staff confirmed that the state was not increasing health insurance premiums. 

However, after some concerns from city council members about not knowing the exact salary wage increase numbers, staff withdrew the increase in wages from the budget and found additional savings. This reduced the citywide deficit for fiscal 2022 from roughly $3 million to $300,000, and decreased the General Fund’s deficit from $1.8 million to having a surplus of $133,804. 

The city council requested that staff find more savings where possible to get closer to a balanced budget. 

Some council members and staff suggested additional savings, such as postponing vehicle replacements — saving $222,000 — and decreasing credit card fees by passing user fees to the customer when they pay for services provided by the harbor as well sales taxes or utilities. The city pays an estimated $100,000 a year on credit card payments. 

City staff will announce their suggested numbers for a bonus on May 11, and the fiscal 2022 budget will be presented for a first reading on May 13.