On Wednesday, however, the measure was vetoed by Mayor James Hornaday, who said in a letter filed with the city clerk that "Homer deserves better than these water and sewer increases at this time."

The "bucket approach," developed by Finance Director Regina Harville and city staff, splits costs for the city's three water user groups - residential, commercial and bulk users - into two main areas. All users will pay a flat monthly "customer charge" of $25 for water and $20 for sewer, plus a fee based on gallons used.

Under the new structure, which will take effect on the first full month of service after July 1, residential customers will pay $0.00442 per gallon for water service while commercial users will pay $0.01140 per gallon and bulk users $0.01269 per gallon. For sewer service, residential customers will pay $0.00997 per gallon and commercial users $0.01264 per gallon.

In his letter, Hornaday said he felt citizens hadn't been made sufficiently aware of the impending rate increase and would be hard-pressed to pay it due to the ongoing economic downturn.

"People are leaving Homer because they cannot afford to live here," said Hornaday in the letter. "Some of our citizens have to chose between paying utility bills and paying for food and medicine."

The veto is the first ever exercised by Hornaday and the first by any Homer mayor since 1995, when then-Mayor Harry Gregoire vetoed an ordinance that also sought to raise water and sewer rates, said City Clerk Jo Johnson.

About a dozen people testified at Monday's council meeting, some of whom said the new rate plan unfairly targets commercial users.

Under the new plan, Land's End Resort on the Homer Spit would see their water and sewer rates go up $1,389.48 per month, said Mike Dye, chief financial officer of the resort.

"Knowing our rates are going to go up substantially is not going to help business, especially in a year like this," said Dye. "We don't have the luxury of raising rates this year and ... we're wondering if we're going to be able to maintain the level of employment we have here now."

"My water bill is almost as much as my tax assessments," said Larry Goode, owner of the Ocean House Inn. "We're on track to have our worst year ever this year and for the city to even be thinking about this right now is unthinkable to me. I implore you to reconsider this."

"Don't put it all on the backs of the commercial users," said Kevin Hogan, owner of the Auction Block on the Homer Spit. "The problem we have with water and sewer is primarily with payroll. Until you guys start looking at the expense side of the equation, we're always going to have the same problem."

Council member Dennis Novak, who officially proposed the new plan along with council member Barbara Howard, said the main goal was to have a rate structure that was based on usage.

"We're not targeting businesses," he said. "You're going to pay your share for the water you use. The commercial group obviously uses a lot of water and we're not going to ask residential users to pay for that extra usage."

The smallest of the user groups - residential customers who use 1,000 gallons of water or less - will pay $2.61 less per month under the current plan but all other residential users will pay between $11.78 and $28.90 more.

The plan encourages conservation, said City Manager Walt Wrede, and will accomplish the council's goals of paying the bills and funding 20 percent of depreciation on the water and sewer system.

"I will not be supporting this," said Bryan Zak, the only council member to vote against the plan. "I don't think we've come up with the answers yet."

"Even though this isn't pleasant, it's something we need to do," said council member Beth Wythe. "I'm comfortable supporting this based on the seven months of research we've done. The fact is we don't have enough users to meet the cost of operations."

Hornaday's veto means the council will have to readdress the issue at its June 8 meeting and will need a two-thirds vote, or four out of six members, to overturn it.

Also at its Monday meeting, the council:

- Gave a round of applause to firefighters from the Homer Volunteer Fire Department, who were instrumental in preventing a larger catastrophe during the Mile 17 East End Road Fire two weeks ago.

- Passed, by a 5-1 vote, an ordinance requiring vessels moored at the Homer Harbor to be under way at least twice a year.

- Appropriated $52,870 to conduct inspections of and evaluations of the Pioneer Dock, Fish Dock and Deep Water Dock.

- Appropriated $10,000 toward the repair of a buoy at the Deep Water Dock.

Aaron Selbig can be reached at aaron.selbig@homernews.com.