It’s clear from the minutes of the Public Safety Building Review Committee meetings, and with all the effort and marketing intended on making a $12 million loan appear to be of negligible effect to taxpayers (calling the tax increase the equivalent of “only 9 fancy coffees per year”), city staff and committee members know that they are pushing a proposal that many will find hard to swallow.
Homer already has the highest sales tax rate of any city or borough in the state. The proposed seasonal sales tax increase from 7.5 percent to 8.15 percent will cement Homer as the most regressively taxed jurisdiction in Alaska. With the third highest property tax rates on the Kenai Peninsula (only Seldovia and the Ocean Drive sea-wall properties are higher), property owners truly invested in Homer are hit extra hard.
As we all know, the State of Alaska is facing tough decisions in the near future as it decides how to address a multi-billion dollar budget shortfall that we simply cannot cut our way out of.
This year, our city manager even wrote to Governor Walker to express the importance of sales tax revenue to the city of Homer. She received a polite response, but no indication that his proposal for a 3 percent statewide sales tax had changed.
Another concern is that in addition to the City of Homer’s Prop 1 question, voters will be asked to weigh in on several borough-level tax propositions on Oct. 4. Borough Prop 3 would increase the taxable sales amount from $500 to $1,000, but pairs that “stick” with a tempting “carrot” by exempting residential rents from taxation all together. While you may think that you don’t purchase a lot of items in the $500 to $1,000 range, keep in mind that this includes non-residential rent, boat moorage, automotive repair, rentals less than one month, construction materials, professional services, utilities, winter tires, etc.
In the City of Homer, we are already robbing from Peter to pay Paul by using dedicated roads and trails funds to cover our operating budget. A new public safety building would increase city facility operating costs $144,000 per year. Our committees spend hours of staff and attorney time determining things like how dogs should be tied up in the back of vehicles. We pay thousands for lobbyists and expensive spreads in dubious promotional catalogs. We cannot continue spending like this.
How many fancy coffees are we actually being asked to buy for the city this time? I know I already buy about 80 “fancy coffee equivalents” per year for a gas line I did not ask for, did not want, do not use, and do not benefit from. The South Peninsula Hospital, which did realize huge savings by switching to natural gas, chose not to pass those savings on to taxpayers, and now comes back to Homer with its hand out again via Borough Prop 2. Their rep says that this will not result in an increase in taxes, but really what it means is that rising property values at the existing mill rate will cover it. Wouldn’t you rather have the tax cut?
The city needs to stop using false figures like 52 cents per water bill, which only attempt to make the financial impact of the City Prop 1 proposal seem insignificant, and provide real information to voters before Oct. 4.
• What is the expected interest rate on the $12 million dollar loan, what is the estimated annual payment, how many years are we being asked to pay back this loan, what is the total cost of the loan? Basically, provide a simple amortization table.
• If the PSBR Committee thinks that this project can be completed with $9.4 million, why is the bond proposition for $12 million?
• What efforts have there been to find alternative and/or additional sources of funding?
While the city has made the case for an improved public safety building, in my opinion, the proponents of city Prop 1 have failed to sell the funding mechanism currently proposed. The uncertainty surrounding the impact of other borough tax propositions, should they pass, and the upcoming legislative session where who knows what revenue proposals will fill the state’s budget gap, are further reasons to avoid making a multi-decade commitment to increased sales tax in Homer at this time.
Dorothy Melambianakis s a lifelong Alaskan whose love for fishing, small towns, and the ocean drew her to Homer in 2004. She is interested in keeping Homer a great place to live by advocating for a sustainable level of government.