Memorandum 15-079 Tax Revenue and Public Safety

Memorandum 15-079

TO:                       Mayor Wythe and Homer City Council

FROM:                 Katie Koester, City Manager

DATE:                  May 26, 2015

SUBJECT:         Tax Revenue and Public Safety

Mayor Wythe asked for information regarding taxation as background for Resolution 15-040.

Property Taxes in the City of Homer

The property tax rate in Homer totals 11.3 mills (4.5 City of Homer, 4.5 Kenai Peninsula Borough, and 2.3 South Peninsula Hospital). This translates to a tax levy of $1,130 for every $100,000 in assessed valuation. However, the first $50,000 in valuation is tax exempt for most residents who request the exemption. In addition, senior citizens (age 65 and older) benefit from an exemption on the first $150,000 in valuation for the City of Homer portion and on the first $300,000 in valuation for the Kenai Peninsula Borough portion. The KPB exemption applies to service area tax assessments as well; for example the one which supports South Peninsula Hospital (City of Homer Adopted Budget for FY15, p. 28).

In 2014 the City of Homer brought in shy of $3 million in property tax revenue.

.01 mill = $6,600

.24 mill = $165,000

.5 mill = $330,000

1 mill = $660,000

Mill Rate in Public Safety Terms

HPD 2015 operating budget: $3.5 million

HPD operating budget mill rate equivalent: 5.3

HVFD 2015 operating budget: $1.025 million

HVFD operating budget mill rate equivalent: 1.55

Sales Tax

As Council is well aware, sales tax is a larger contributor of dollars to the General Fund by about 2:1. 2014 sales tax revenue was budgeted at just shy of $7.5 million. It is worth mentioning that sales tax revenue is down by 8% the first quarter of 2015 compared to 2014. The City budgeted for a 2% increase in sales tax revenue. If this trend continues, the City could be looking at coming in ¾ of a million dollars short this year in sales tax revenue.  

Enc:

2014 Mill Rate Table from KPB

Sales Tax Summary by Jurisdiction from KPB for First Quarter of 2015