CITY OF HOMER

HOMER, ALASKA

Novak

ORDINANCE 04-57

AN ORDINANCE OF THE CITY COUNCIL OF HOMER, ALASKA APPROVING AND SUBMITTING A ONE PERCENT INCREASE IN THE CITY SALES TAX, WITH .25 PERCENT DEDICATED TO A COMMUNITY ENHANCEMENT FUND, TO THE VOTERS FOR VOTER APPROVAL AT A SPECIAL ELECTION ON TUESDAY, FEBRUARY 22, 2005 AND PROVIDING FOR A MAXIMUM PROPERTY TAX RATE IN 2005 OF 4.25 MILS IF THE SALES TAX INCREASE IS APPROVED BY THE VOTERS.

WHEREAS, The Homer City Council recently adopted a Long Range Fiscal Plan, and

WHEREAS, During the planning process, the Council recognized that significant General Fund budget increases will be necessary beginning in FY 05 due to inflation, expanding population and infrastructure, rapidly rising insurance and PERS costs, new depreciation funding requirements, and projected capital construction costs and the associated increases in the costs of maintenance and operations, and

WHEREAS, The City Council wishes to be proactive and plan ahead so that it can adequately provide for a basic level of public services and meet the needs and desires of Homer residents, and

WHEREAS, Appendix D of the adopted Long Range Fiscal Plan identified a potential fiscal gap of $1,030,303 in FY 05; an estimate that the Council considered to be conservative, based upon sound assumptions, and focused upon essentials, and

WHEREAS, The City's General Fund budget must be balanced and the Council recognized that it must either make significant budget reductions, increase revenues, or some combination of both, and

WHEREAS, The Council concluded during the planning process that although some budget reductions are still possible, the demand for the services the City provides is strong, all Department budgets are already very lean, the City could not make substantial reductions without eliminating entire programs, and that increases in revenues will therefore be necessary, and

WHEREAS, The Long Range Fiscal Plan identified nine short term options for raising revenues that the Council considered to be feasible and prudent, and

WHEREAS, Raising the annual sales tax while simultaneously lowering the mil rate is an option that has been identified by the Council as desirable, and

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City of Homer

WHEREAS, The advantages of this option include the following; and

· revenues can be increased for the 2005 budget

· it provides for an impartial and broad based tax

· it requires no additional administrative or implementation costs

· it raises the amount of revenue needed to maintain the current level of service with a balanced budget

· it creates a Community Enhancement Fund providing a future revenue source.

· it allows a property tax reduction promoting an equitable distribution of tax burden for regional services.

· Projected net revenue for 2005 $966,551.25.

WHEREAS, The property mill rate reduction of .75 mil would be effective beginning January 1, 2005 and .25% of the sales tax would be dedicated to a Community Enhancement Fund, the conditional expenditures and criteria to be developed upon approval of the voters and after certification of the election.

NOW THEREFORE, the City of Homer Ordains:

Section 1. The City Council finds that at the present time it is in the best interest of the City to raise the City Sales Tax rate of property levy by 1 percent from 3.5 to 4.5 percent and to simultaneously lower the property tax mil rate by .75 mils from 5 mils to 4.25 mils.

Section 2. Homer City Code Section 9.16.010 is hereby amended to read as follows:

9.16.010 Levied. a. A consumer's sales tax in the amount of two three percent is levied by the City on all sales, rents, and services within the City except as the same may be otherwise exempted by law.

b. An additional consumer's sales tax in the amount of three-quarters percent (3/4%) is hereby levied by the City of Homer on all sales, rents, and services within the City except as the same may otherwise be exempted by law, for the purpose of funding debt retirement of the sewer treatment plant improvements, and to the extent revenues from such tax exceed such debt retirement obligations, for the purpose of funding water and sewer systems.

c. An additional consumer's sales tax in the amount of three quarters percent (3/4%) is hereby levied by the City of Homer on all sales, rents, and services within the City except as the same may be otherwise exempted by law, for the purpose of funding street reconstruction improvements and related utilities. . (Ord. 99-14(S), Ord. 91-19 section 1, 1991; Ord. 90-29 sections 1 and 2, 1990; Ord. 87-19 section 1, 1987; Ord. 85-37 section 2, 1985).

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City of Homer

Section 3. For property taxes levied and assessed in calendar year 2005, the property tax rate of levy set by the City Council under Homer City Code Section 9.04.040 shall not exceed 4.25 mils.

Section 4. The City Clerk shall submit the following question to the voters at a Special Election to be held on Tuesday, February 22, 2005. The ballot proposition shall read as follows:

Shall the City of Homer Sales Tax rate of levy be increased by 1 (one) percent (from 3.5% to 4.5%)?

_____ YES NO______

Section 5. The City Manager and City Clerk are authorized to provide an explanation to the voters regarding the Council's finding that the new revenues generated if this proposition is approved by the voters are needed to maintain existing services, meet anticipated increases in operational expenses, increase the cash balance in depreciation, provide funding for additional services, provide for bond payments and operations costs associated with the new Homer Public Library, fund maintenance and operations costs associated with the new animal shelter, and other priorities identified by the recently adopted Long Range Fiscal Plan.

Section 6. If the ballot proposition set forth in this ordinance is approved by the voters, sections 2 and 3 of this ordinance shall take effect on January 1, 2005. If the proposition is not approved by the voters, sections 2 and 3 of this ordinance will not take effect.

Section 7. If the ballot proposition set forth in this ordinance is approved by the voters, Section 2 of this ordinance shall be of a permanent and general character and shall be included in the City Code. The remaining sections of this ordinance are not of a permanent nature and as such, shall not be codified.

PASSED AND ENACTED by the Homer City Council this ____ day of ______, 2005.

CITY OF HOMER

JAMES C. HORNADAY, MAYOR

ATTEST

MARY L. CALHOUN. CMC, CITY CLERK

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City of Homer

Introduction:

Public Hearing:

Second Reading:

Effective Date: If approved by the Voters and Upon Certification of the Election

Ayes:

Nayes:

Abstain:

Absent:

Reviewed and approved as to form and content:

Walt Wrede, City Manager Gordon Tans, City Attorney

Date: Date:

Fiscal Note: Projected net revenue for 2005 $966,551.25. Sales Tax increase would provide $1,288,735.00 for a year and a .75 mil decrease for the year equals $254,804.00 decrease in property tax revenue. The net revenue for one year would be $1,033,931.00.