The New Lexicon Webster's Dictionary of the English Language, Encyclopedic Edition, 1989, defines "windfall" as something of value received unexpectedly, without any effort of one's own to secure it." There are certain funds due the city as a result of the Exxon Valdez Oil Spill settlement which arguably can be considered windfall. Investing these and other similarly gained funds into an investment program similar to the state of Alaska Permanent Fund, would have the potential of generating income for the city far into the future.
In the absence of an established method of handling "windfall" funds, it is very easy to spend them and receive only a temporary or immediate benefit from them. Investment in a revenue-generating account will allow both the current and future generations of Homer residents to benefit from the funds. I am proposing this ordinance now, so that when the city of Homer is the recipient of "windfall" funds, there is a mechanism in place to ensure this generational continuation of benefits.
The proposal before the Homer City Council (Ordinance 05-14) provides for the Exxon Valdez funds (when realized) and any other "windfall" funds to be invested into a revenue producing investment account and for 95 percent of the revenues so produced to be added to the general fund revenues for budgeted expenses. The remaining 5 percent will remain with the principal to provide a margin of inflation proofing.
The proposal further provides for revenues to only be included in the general fund budgeting process after they have been realized. The intent of allowing the inclusion of the revenues in the budget only after they are realized is to ensure that speculative earnings are not used as a method of balancing a tight budget.
The Alaska Permanent Fund was enacted by an addition to the state Constitution. Amending the state Constitution requires a two-thirds vote of each house of the Legislature, followed by a majority vote of the votes cast on the proposition in favor of the amendment. This is not an easy task. Changing a city ordinance is currently as simple as a majority vote of the seated council in favor of the proposal. In order to secure the principal of a city permanent fund, my proposal requires a community vote and that more than a simple majority vote of those qualified to vote and voting on the question would be required to access the principal.
At this time, no contingency for dire emergency access is included in the ordinance language, but it is my plan to discuss this with the council at the next review. In the event of a catastrophic emergency need, such as the earthquake in 1964, it would be prudent for a conscientious vote of the council to allow the use of principal sums as an immediate funding source, with a provision for replenishing the fund with such monies as may become available through proper channels after the crisis is abated.
Beth Wythe has been a member of the Homer City Council since October.
We encourage you to add your comments. To prevent spam, comments with links are manually approved during the normal business day. Please be respectful of others with your comments, bear in mind anyone in the community may be reading your comments.
