M E M O R A N D U M 05-110

TO: MAYOR HORNADAY AND HOMER CITY COUNCIL

FROM: COUNCILMAN DOUG STARK

DATE: COUNCIL MEETING OF 13 JUNE 2005

SUBJECT: PROPERTY TAX RATE FOR 2005

The resolution says most of it. Even with a mill rate of 4.0 we will receive 5% more in property taxes than last year. The increase in the sales tax will cover what we need this year. And we

have been granted $1,680,000 in state and federal funds in the last three weeks, almost ten

times the proposed reduction in property taxes.

A small consideration is that with a mill rate of 4, our neighbors can voluntarily annex and pay less than a mill additional in property tax. KESA at 1.75 mills and KPB Roads at 1.3 disappear on annexation. For less than a mill, our neighbors get better road and police service and a chance to legitimately complain to the City Council. AND they can run for a Council seat.

As you remember, I supported the half percent sales tax increase last year, because I felt that

a 6% tax was the reasonable limit. And I opposed the 1% increase this year because I knew that we could make it to year end and the future looks bright. Now that the Borough is raising the sales tax rate to 7 1/2 %, I intend to bend every effort in November's budget review to find a

way to lower it by a half percent.

RECOMMENDATION:

Adopt the resolution.