CITY OF HOMER
HOMER, ALASKA
Novak
ORDINANCE 05-03(A)
AN ORDINANCE OF THE CITY COUNCIL OF HOMER, ALASKA APPROVING A ONE PERCENT
INCREASE IN THE CITY SALES TAX[, WITH .25 PERCENT DEDICATED TO A COMMUNITY
ENHANCEMENT FUND,] AND SUBMITTING A PROPOSITION TO APPROVE SUCH CHANGES TO THE
VOTERS FOR VOTER APPROVAL AT A SPECIAL ELECTION ON TUESDAY, MARCH 22, 2005 AND
PROVIDING FOR A MAXIMUM PROPERTY TAX RATE IN 2005 OF 4.5 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
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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
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 revenue for 2005 $966,551.25.
WHEREAS, If a one percent sales tax rate increase is approved by the voters, the City Council will make a property
tax mill rate reduction of 1 mil, in 2005.[, and further will appropriate one-quarter of the sales tax increase
(equivalent to a .25% rate of levy) to a newly created fund, to be called the Community Enhancement Fund, with the
criteria for expenditures from that fund to be developed by the City Council after certification of the election results.]
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 total City
Sales Tax rate of levy by 1 percent from 3.5 to 4.5 percent and to simultaneously lower the property tax mil rate by 1
mil from 5.5 mils to 4.50 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.
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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).
Section 3. The Homer City Code is hereby amended by the enactment of a new section 9.16.015 to read as follows:
9.16.015 Dedication. A portion of the sales tax levied and collected pursuant to subsection 9.16.010(a) is dedicated
as follows:
a. The proceeds from the levy of one-quarter of one percent (0.25% levy) is dedicated by the voters to the Community Enhancement Fund, generally for the purposes of making grants to local governmental and non-governmental organizations and making direct expenditures to implement, enhance, or supplement the City's overall economic and community development strategies.
Section 4. 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 4.50 mils.
Section 5. The City Clerk shall submit the following question to the voters at a Special Election to be held on
Tuesday, March 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%)? [; and
further shall one-quarter of that increase be dedicated to a new Community Enhancement Fund for the
purposes of making grants to local governmental and non-governmental organizations and making direct
expenditures to implement, enhance, or supplement the City's overall economic and community development
strategies?]
_____ YES NO______
Section 6. 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, and further explain the
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purpose of dedication of tax revenue to the Community Enhancement Fund for grants to local organizations.
Section 7. If the ballot proposition set forth in this ordinance is approved by the voters, the City Council shall before
July 1, 2005, enact one or more ordinances to establish the Community Enhancement Fund and enact appropriate
regulations for the administration of such fund, including procedures for making appropriations from that fund and
criteria for determining eligibility and priority for grant recipients.
Section 8. If the ballot proposition set fort in this ordinance is approved by the voters, Sections 2 and 3 of this ordinance shall take effect on April 1, 2005, and Section 4 of this ordinance shall take effect immediately upon certification of the election results. If the proposition is not approved by the votes, Sections 2 through 4 of this ordinance will not take effect. All other sections of this ordinance take effect on the day following enactment.
Section 9. If the ballot proposition set forth in this ordinance is approved by the voters, Sections 2 and 3 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 14th day of February, 2005.
CITY OF HOMER
JAMES C. HORNADAY, MAYOR
ATTEST
MARY L. CALHOUN. CMC, CITY CLERK
Introduction: 01/10/05
Public Hearing: 01/24/05
Second Reading: 02/14/05
Effective Date: If approved by the Voters and Upon Certification of the Election
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Ayes: -4-
Noes: -2-
Abstain: -0-
Absent: -0-
Reviewed and approved as to form and content:
Walt Wrede, City Manager Gordon Tans, City Attorney
Date: Date:
Fiscal Note: Projected revenue for 2005 $966,551.25. Sales Tax increase would provide $1,288,735.00 for a year
and a 1 mil decrease for the year equals $339,738.00 decrease in property tax revenue. The revenue for one year
would be $948,996.34.
Cost of Special Election is approximately $7,000.00, with 2005 costs may be higher.