Memorandum 15-168 Revenue Solutions and Special Election Dates

Memorandum 15-168

TO:                       Honorable Mayor Wythe and Homer City Council

FROM:                 Katie Koester, City Manager

DATE:                  October 7, 2015

SUBJECT:         Revenue Solutions and Special Election Advertising and Dates

I have three goals for the October 12 meeting that will significantly advance the budget conversation:

Decide on a revenue option to take to the voters.
Set a date for a special election.
Receive guidance from Council on a revenue option informational campaign.
Set a date for the third Town Hall.

Revenue Options

Suspending HART and implementing a seasonal sales tax are both on the agenda for the October 12 meeting. Both options meet the necessary requirements of raising significant revenue and can be implemented by the voters in the short term. I would like Council to engage in a discussion regarding both options with the hope of landing on one to take to the voters.

Why pick only one option?

I know there has been a desire expressed to let the voters choose between different options. There are pros to this option; however, I believe two initiatives on the ballot would be confusing. It potentially dilutes the votes of voters who do not want to see a reduction in City provided services. Conversely, it presents a problem if both ballot measures win, which would take precedence?It also makes it difficult for staff to send a consistent message, if an information campaign is approved (Ordinance 15-39).

The pros and cons generated from the public at the Town Hall are presented below. I have also attached the revenue pages from the ‘Closing the Gap’ Town Hall in July. I would be interested in increased discussion by Council.

Seasonal Sales Tax Increase (6 months 1%): $1,141,762

Revenue solutions Town Hall: Positive Response 88%

PRO:

Captures revenue from visitors

Better than a year round increase

More equitable

Visitors have money

Will have more money in the winter when we need it

CON:

In effect acts like a bed tax

Regressive

Changes to sales tax add to the complexity of collection by businesses

Suspend Homer Accelerated Roads and Trails (HART) for 3 years: $996,601

Revenue solutions Town Hall: Positive Response 90%

PRO:

Not new revenue (redirection of program that has been around for 27 years)

Current balance: Roads: $7m / Trails: $560,000 (low yield)

Could be reduced

Could have a special election soon (b/c second reading on October 12)

CON:

Roads are critical infrastructure

Used as matching to leverage grants

SAD program

Trails are needed

Savings for emergency road needs is important

Set a date for a special election

Resolution 15-086 sets a date for a special election. At the last Council meeting I asked you to leave that blank so we could come back and set the date once we knew if a runoff election was necessary. Without a runoff, the pressure to reduce the number of elections and consolidate a special election on revenue options with a runoff has been relieved. The printer needs a minimum of 10 days to print a ballot. The pros and cons of the two most logical options are discussed below.

December 1 Special Election: Absentee voting November 16 - December 1.

PRO:

-It would be a great relief to deal with this issue before the end of the year and begin 2016 with clarity

-It would remove the uncertainty for employees over the Christmas holiday.

CON:

-Puts absentee voting over the Thanksgiving holiday

-Does not give much time for an informational campaign. If Ordinance 15-37 is approved on October 26, that is just 3 weeks before absentee voting begins

-Could appear rushed by the public

-December is a time when people are often gone

-Will be difficult for staff to administer

February 2 Special Election: Absentee voting January 18 – February 2.

PRO:

-Gives plenty of time for an informational campaign

-Is not near ‘the holidays’

CON:

-Extends the uncertainty for employees – and organizations that depend on City revenue for their 2016 budget – by 2 months

-City cannot focus on other needed projects while the budget discussion looms

-Would have to fund the first two months difference between Budget A and Budget B, $92,000, from fund balance (this could later be reimbursed if either of the options being considered are approved).

Guidance on informational campaign

Ordinance 15-39 authorizes the City Manager to spend money on an information campaign for either of the revenue options discussed tonight.

If Council approves Ordinance 15-36(A) and/or 15-37, I propose an informational campaign that prints and mails a brochure to all registered super voters. This same brochure can be used for Council members to educate the public on the ballot initiative.A get out the vote campaign, including advertisements in papers, will be necessary given the unique timing of the elections. From what I understand, the appropriation does not need to include staff time to draft or execute the informational materials. Please provide further direction on additional outreach measures Council would like to see happen.

One mailing to registered voters (postage): $2000

Print 4500 copies of a brochure: $1000

Newspaper advertisements: $1,000

Total: $4000

Date for third Town Hall

We have advertised a third Town Hall for folks after the draft budgets are released that will have an online ‘balance the budget’ component. Currently, the date that has been advertised is November 2nd. This could be changed/discussed depending on the date Council chooses for a special election.

Enc: Closing the Gap Town Hall revenue options results