Council OKs $21-million budget for ’16

One item topped the Homer City Council’s to-do list at Monday’s regular meeting, the absolute, must-pass ordinance it had to approve before the holidays: the budget.

Monday night at its regular meeting, after a round of amendments tweaking the $11.7 million general fund budget, the council in a 6-0 vote passed Ordinance 15-41(s)(a).

“The budget process is complete for one more year,” Homer Mayor Beth Wythe said after the vote. “Good job.”

That process started last summer with a series of town hall meetings seeking citizen advice on bridging an anticipated $1.2 million gap between revenues and expenses based on current levels of spending. It ended a week after 75 percent of the voters in a special election on Dec. 2 approved Proposition 1. Prop. 1 suspends for three years a .75-percent sales tax contribution to the Homer Accelerated Roads and Trails fund and puts about $1 million raised annually into the general fund.

When City Manager Katie Koester presented the city’s budget to the council on Oct. 12, she gave them two options. 

Budget A assumed Prop. 1 would pass, but it also included about $705,000 in cuts. Budget B, the bare-bones budget, had $1.2 million in cuts and would take effect if Prop. 1 failed. With voters approving Prop. 1, Budget A is the budget the council passed on Monday.

However, the council considered some amendments and attempted to change line items in the general fund budget. At Koester’s request, the council added several items: $8,500 for a submersible pump at the water treatment plant, $45,000 for West Homer Elementary School area and Soundview Avenue safety improvements, and $12,500 for Calhoun Trail work. Council member Catriona Reynolds also added $315,000 for a Soundview Avenue sidewalk extension by the school. The road and trail improvements will be paid out of the HART fund, which still has $7 million. The pump will be paid out of water fund reserves. All those amendments passed.

Reynolds also introduced a $200,000 amendment to fund phase 1 of an expansion of Hickerson Memorial Cemetery on Diamond Ridge Road. The current cemetery has 10 plots left at $200 a plot. With about a dozen lots sold a year, the cemetery will run out of burial plots in a year. Phase 1 would start planning and construction of 700 new plots on lots owned by the city just west of the cemetery. The council passed that appropriation unanimously.

A supplement to the council packet with proposed budget amendments showed the source of that $200,000, but council members didn’t discuss the source of its funding at Monday’s meeting. On Tuesday, Reynolds clarified that the money would come from $112,000 from the City Hall budget reserve fund and $80,000 from the Parks and Recreation budget reserve fund.

The council also passed a resolution changing city fee schedules for things like camping fees, library fees and ambulance fees. That included raising the price of cemetery plots in the new cemetery to $1,000. In the long run, sale of plots would fund expansion of the cemetery. Koester noted in a memo on the cemetery that taking money out of the City Hall reserves would decrease funding for a new roof on City Hall.

Taking money from depreciation reserves to fund a new capital project seemed to contradict a pitch the city made to support Prop. 1: that the city also needed to replenish reserves in addition to funding city government. Diverting money from HART sales taxes to the general fund helps bridge the budget gap, but it also put about $500,000 in budget reserves.

“We are having to make emergency purchases for critical equipment because reserves have not been funded over the last three years,” Koester told the Homer News in an article on Prop. 1 last month.

Reynolds raised the question of budget reserves in another council action, a vote on an ordinance on how to manage the city’s $2 million Permanent Fund. That ordinance would have the fund managed in-house and not through an outside brokerage. Reynolds made a motion to move the Permanent Fund into budget reserves. 

Wythe said that’s in excess of what the city needs in reserves, however.

“Before we disperse the money we should have a lot of conversation,” she said.

Reynolds’ motion to disperse the Permanent Fund failed, but the council did agree to postpone the ordinance on how to manage it to its next meeting on Jan. 11.

The council also postponed until next May a fall-back revenue proposal that council member David Lewis introduced in Oct. 12 in the event Prop. 1 failed. Ordinance 15-37 would raise the city sales tax from 4.5 percent to 5.5 percent from April 1-Sept. 30. With Prop. 1 passed, the seasonal sales tax concept becomes part of the city’s long-range debate on how to fund government at current levels. Wythe said before putting that to the voters, the city should wait and see what tax questions the state and Kenai Peninsula Borough put to voters.

The council spiked two amendments to the budget: one by council member Heath Smith to delete $44,000 for lobbying fees and put that toward library books and another proposal by Wythe to reduce council and mayoral compensation by $8,864 and reappropriate that to library books. Council member Donna Aderhold introduced Wythe’s proposal for her, but it failed in a 2-4 vote, with Aderhold and Reynolds voting yes.

“I think that money can be used in more useful ways in the city,” Smith said of lobbying.

Council member David Lewis spoke in favor of lobbying.

“There’s a lot of different things going on in Juneau that we need to know about now, not three or four days later,” he said.

Earlier in the meeting, Linda Anderson of the Anderson Group, the city’s lobbyist, updated the city on lobbying efforts in the last session. Homer, like other cities, got nothing in state grants, she said.

Next session will be the same, she said. Lobbying efforts will shift to addressing legislation affecting Homer. 

“Can we look at the legislation and make sure Homer has a seat at the table?” Anderson asked, citing things like proposals for a state sales tax.

Wythe agreed with that shift in focus.

“The function of a lobbyist is less about what we will receive and more about what legislation will affect you,” Wythe said in supporting a lobbyist contract.

The council tied 3-3 on a vote to delete lobbying fees. Wythe broke the tie by voting against Smith’s amendment, saving the lobbying contract.

In comments at the end, Anderson thanked the council for supporting her contact.

“I would like to put on the table I’m going to need your help as much as you’re going to need ours,” she said. “It is next to impossible to write a definition and job description for what we do.”

The council also took a stand on another revenue issue, a state mandated $150,000 discount on property tax assessments for seniors age 65 and older. In a resolution passed unanimously, the council asked the Alaska Legislature to change the law to allow local governments to determine the value of property tax exemptions for seniors. In Homer, $61 million in property value was exempted at a cost of $275,000 in lost taxes.

“I think with the ever increasing percentage of people over 65 it is becoming unsustainable to have the full amount,” Reynolds said.

Aderhold said she understood some seniors on fixed incomes would find it hard to pay property taxes — but so do some young people.

“I would rather see something where we can evaluate property tax exemption based on need rather than age,” she said.

In other budget items, the council also addressed an inequity raised by Rick Malley, a visually impaired Homer man who could not vote by secret ballot at the October regular election, the November run-off election and the December special election because the Kenai Peninsula Borough and city of Homer did not have accessible voting machines. The council approved spending $3,800 in this year’s budget to buy two refurbished touch screen voting machines that would allow blind people to vote.

 

City of Homer 2016 Budget

General fund: $11,658,093

Water fund:   $2,105,246

Sewer fund:   $1,626,500

Port/Harbor fund: $4,688,729

Capital projects:    $1,355,275

Total:                   $21,433,843

Cuts:

• 1 Homer Police Department dispatcher and 1 jail officer: $141,500 

• Planning and Zoning code enforcement officer: $80,500

• Homer Public Library books and supplies: $30,000

• Part-time (16 hours) administrative assistant, city manager’s office: $20,000

• 1 Finance Department position: $160,000

• Public Works positions (2 20-hour part-time): $167,000

• Other non-personnel general fund cuts: $110,000 (tools, supplies, etc.)

All the personnel cuts were to vacant positions, and no one was laid off because of budget cuts.

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