M E M O R A N D U M 05-98

TO: MAYOR HORNADAY AND HOMER CITY COUNCIL

FROM: COUNCILMAN DOUG STARK

DATE: COUNCIL MEETING OF 24 MAY 2005

SUBJECT: PROPERTY TAX RATE FOR 2005

The Resolution says most of it. The Finance Director last Committee of the Whole verified my figures from last month that even with a mill rate of 4.0 we will receive 5% more in property taxes than last year. And the increase in the sales tax will cover what we need this year.

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 either 1.3 or 1.4 (to be determined this week) disappear on annexation. And 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. And more later.

Most of you will recall that we spent money last year for better finance software so we could have quarterly, even monthly finance reports. We haven't been getting them, we need them, and we should have them.

RECOMMENDATION:

That the administration start supplying more timely finance reports.

Fiscal Note: See Resolution 05-66.