By a 3-to-1 margin, Proposition 1 easily passed in a special election on Tuesday. The measure diverts into the general fund a .75-percent sales tax collected for the Homer Accelerated Roads and Trails fund. With a 13-percent turnout, voters in both Homer precincts approved the vote.
Prop 1 won with 368 yes votes to 115 no votes.
“It makes life a little bit easier for everyone, and adds some stability with the city while we work on our other budget problems,” said Homer City Council member and Mayor Pro Tem David Lewis. “So now it’s Budget A, with any changes the council makes at the time.”
Lewis referred to one of two budgets Homer City Manager Katie Koester presented to the council in her draft budget. Budget A was a budget similar to the 2015 budget, with no major changes to city services, although Koester made $750,000 in cuts. Budget B was a more drastic budget, what Koester called the “bare bones” budget, with deeper cuts to services like police and emergency services and the Homer Public Library.
Under city code, .75 percent of sales taxes goes to the HART fund, a fund used to build and upgrade new roads and trails. It has about $7 million now and raises about $1 million annually. With Prop 1 passing, that $1 million goes to the general fund for the next three fiscal years.
The city follows a calendar-year fiscal year, with the new fiscal year starting on Jan. 1, 2016. Prop 1 does not take money out of the HART fund already collected and does not raise sales taxes.
“It’s something that had to be done to give stability to the employees so that they know they’re working, keep the library going. The HERC building will stay open now. Now we just have to solve our long-term problem,” Lewis said.
Prop 1 gives the city some breathing room to address anticipated declines in state funding, such as a cut to the city’s community jail contract, a drop in sales-tax revenues and expected increases in budget items like employee health insurance.
“The next step is to work on long-term solutions that take more time and thoughtful consideration — working with the borough, exploring creative revenue solutions, economic development and continuing to make sure we are operating as efficiently as possible,” Koester said.
Before putting Prop 1 to the voters, the city held a series of town hall meetings to provide information about its budget problem and start discussion on possible solutions.
One revenue option is up for second reading and a public hearing at Monday’s council meeting. At the Oct. 12 council meeting when Koester presented her budget, the council also introduced on first reading another proposal to raise revenues, a 1-percent seasonal sales tax increase that would run from April 1 through Sept. 30. That proposal was put on the agenda to give the council other options in case Prop 1 failed, but also to address the long-term deficit issue. If the council passes the ordinance, like any sales tax question, it would go to the voters at the October 2016 election.
Lewis said the council might want to be cautious about putting items to the voters next year. The Kenai Peninsula Borough also is considering changes to its own tax code.
“If the borough has a bunch of stuff, you don’t want load it (the ballot),” Lewis said. “Then you’re more apt to have things voted down.”
Opposition to Prop 1 before the election was slight, with only a few political commentators like former council member Mike Heimbuch advocating against it.
“I think most people were in favor of it,” Lewis said. “It was the easiest solution at the time without raising taxes.”
Koester said the city and council also is “committed to working on HART and making the program a useful tool for today’s Homer,” she said.
At a Nov. 23 council work session, Koester asked the council to take a look at HART and consider changes like allowing the fund to be used to build sidewalks. Some council members also addressed the larger issue of why neighborhoods weren’t passing special assessment districts to build or improve roads and trails. HART subsidizes road projects at a rate of $30 a foot for gravel roads and $17 a foot for paving roads.
The council had passed an ordinance appropriating up to $5,000 to advocate for passing Prop 1, the legal process for a city to support a ballot proposition and comply with Alaska election laws.
“I am so appreciative of the leadership of the council and the hard work of the community through town halls, council meetings and online surveys,” Koester said. “There is more work to come but I know that by working together the vibrant and healthy Homer we all know and love can and will thrive.”
Michael Armstrong can be reached at email@example.com.