After months of tweaking, the Homer City Council gave the green light to a ballot question Monday that would raise taxes and use that money for recreation projects, a new city hall and a new town center.
The ballot question asks for a sales tax increase of .25 percent that is projected to raise more than $400,000 next year. Half of that money, but no more than $200,000, would be set aside as seed money for area nonprofits to secure matching funds for recreation projects. In a shift from previous offerings, the remainder will be used to develop the new town center plaza and new city hall.
Council member Mike Heimbuch said during the Committee of the Whole meeting on Monday that several citizens have asked him why the city needs a new city hall in the first place. Bundling funding for that project with the more popular recreation-funding plan may help it pass, he said.
"That's why these things are coupled," Heimbuch said.
The ordinance approved Monday began more than a year ago as a failed attempt to institute a seasonal sales tax. Voters last October defeated that proposition handily, but passed another making the Homer Community Schools program a permanent city function by a 2-1 margin.
Noting the public sentiment in favor of the Community Schools program, Heimbuch, the original proposition's author, tried to link a seasonal sales tax to recreation funding. According to that plan, area nonprofit groups could apply for the city funds through a grant program and then use that money to leverage other state and federal grants, many of which require a municipal buy-in.
Despite vocal public support for the recreation funding idea, the seasonal tax plan could not be sold to the council.
The ordinance approved Monday scraps the seasonal sales tax idea in favor of a season-long increase of .25 percent. With the Kenai Peninsula Borough raising its sales tax rate to 3 percent in January 2008, the overall sales tax in Homer will be 7.75 percent if this proposition is approved.
While the summer sales tax would have been above 8 percent under a seasonal sales tax proposal, it's still too high under this plan and may force people to shop elsewhere, said council member Doug Stark.
"We've gotten to the point that if it gets this high the local merchants will be hurt," he said. "There's a marginal propensity to spend as taxes go up. At some point I think we will get less revenue."
Heimbuch said this .25 percent increase falls short of some sort of economic tipping point, and it beats the alternative.
"This is a better way to do this than go up against the brick wall of property tax," he said.
Council member Beth Wythe added she was opposed to increasing sales taxes, but was willing to let the voters decide.
"Voters are the best stewards of their own money," she said.
The ordinance passed 4-1 with Stark voting against it.
The question on the Oct. 2 ballot will read:
"Shall the city be authorized to increase the sales tax rate by 1/4 percent (from 4.5 percent currently to 4.75 percent) and shall the increased revenue be dedicated to provide a source of matching funds for local recreation opportunity and a source of funds for development of the town center plaza with a new city hall?"
In other news the council:
* Accepted a $40,946 Automated Fingerprint System Grant through the Division of Homeland Security and Emergency Management. The system is digital and instantly records fingerprints allowing them to be compared to the national database for immediate identification.
* Listened to public testimony and then postponed an ordinance amending the city's motorized vehicles on the beach policies until the first meeting in April to work over the winter on a better policy.
* Authorized Mayor Hornaday to travel to Washington, D.C., on a lobbying trip.
* Accepted the recommendations of the City Hall/Town Plaza review committee.
* Passed a resolution by Mayor James Hornaday in support of a clean elections system in Alaska.
* Commended Tesoro Petroleum for stationing a response tug in Cook Inlet year round.
Ben Stuart can be reached at ben.stuart@homernews.com.
