The city of Homer's Fiscal Year 2009 budget, passed by the city council at its Monday regular meeting, will not contain two controversial elements -- a proposed 15 percent increase in water and sewer rates or a plan to continue taxation on non-prepared foods from Sept. 1 to May 31.

Although several members of the public packed the Cowles Council Chambers to testify against continuation of the "grocery tax," the decision to discard Ordinance 08-59, which called for a 1.5 percent city tax on non-prepared foods, was made by its sponsors before they arrived.

"I am going to make a motion to table the ordinance on sales tax on non-prepared foods," said council member Dennis Novak, who originally proposed the ordinance along with council member Francie Roberts, at a Committee of the Whole meeting earlier in the day. "It's my feeling that it should go to a public vote."

Council member Beth Wythe agreed and later proposed an amendment to Ordinance 08-32(S)(A), which called for a seasonal exemption on the nonprepared foods tax similar to the one passed by Kenai Peninsula voters in the Oct. 7 municipal election, to exempt the tax "pending the completion of an advisory vote."

Wythe's amendment, and the ordinance instituting the "grocery tax" exemption, passed.

A special election to hold an advisory vote would likely take place in April, said city clerk Jo Johnson, and would cost about $8,000 to conduct.

Also at its Committee of the Whole meeting, the council debated the merits of an aggregated 15 percent increase in water and sewer rates. Faced with three options -- a 15 percent rate increase, a 7.5 percent increase or no increase at all, the council, after some discussion, went with the latter.

"I do not support any change in rates right now," said Novak. "I do not believe we should be changing the rates here without a proper public comment period. We need a solution that's going to take us beyond the next year or two."

Asked if the water and sewer fund would still be viable if the council chose not to raise rates, city manager Walt Wrede said yes.

"I'd say you're still viable," he said. "You have a sizable amount of money in the depreciation fund right now. It wouldn't be optimal, but it wouldn't be a disaster either."

Novak later officially proposed an amendment to the budget ordinance "to reflect no change in the water and sewer rates." The amendment passed, with only council members Wythe and Barbara Howard voting against it.

Ordinance 08-50, the sweeping FY 2009 budget ordinance that has been the subject of hours of council discussion in recent weeks, was eventually passed with relatively few changes made to the original budget proposal presented to the council by Wrede in October. Only Howard and council member Bryan Zak voted against it.

The changes, proposed by Novak, called for a $5,000 cut in the council's travel account, a $15,000 contribution toward implementation of the city's Climate Action Plan, a $17,500 increase in funding to the Pratt Museum and a $27,500 cut in funding to the Homer Foundation.

The Homer Foundation, which disperses city funding to all local nonprofits but the Pratt Museum and the Homer Chamber of Commerce, saw its city funding cut in half. The council directed, however, that all of the foundation's remaining funding be distributed directly to nonprofit agencies while the other half, which would normally have gone into an endowment fund, would be suspended for FY 2009.

Joy Steward, director of the Homer Foundation, said she understood the cuts.

"What it means is that the endowment wouldn't grow this year, but my recommendation would have been the same," said Steward, noting the endowment fund returned about $7,000 last year. "Of course I'm disappointed but it was realistic that the city was going to have to make some cuts. I'm glad that they recognize the value of nonprofits."

Aaron Selbig can be reached at aaronselbig.@homernews.com.