The Homer City Council stands at the beginning of a discussion about removing the sales tax holiday that lasts from Oct. 1 to May 31 each year since 2009. The rationale expressed by sponsor Bryan Zak is that the estimated $700,000 in revenue could be added back into the budget to spend on necessary city business. Zak isn’t alone in this sentiment around the council table.
The idea carries noble intentions when it comes to filling a long vacant police-fire dispatch position. The vacancy means an important gap in Homer’s emergency response ability. Another good cause might be seen in granting city employees a 1 percent rise in the Cost of Living Allowance after several years of no COLA. Rising health care premiums mixed with higher inflation mean these hard working employees are falling backward on the pay scale. Then too, the notion of giving $50,000 to the Homer Senior Center is a great cause. Homer hasn’t made regular contributions to its senior center, while most municipalities in Alaska support their pioneers in established budget line-items.
The truest noble cause, however, is the even more disadvantaged consumers in Homer. Besieged by the highest taxes on the Kenai Peninsula, Homer residents pay stiff property taxes. Renters pay rental taxes on top of what their landlords pay in property taxes. If you buy construction supplies to add on to a home, you will pay taxes on that, even the nails used to hammer those walls together. Your new snow tires will cause city coffer cash registers to ring. Your increasing gas pump costs may cause you to weep, but they make a happy sound landing in the City’s General Fund.
While there may have been set backs in the rising cost of healthcare, this has been a good year, revenue-wise for the city. Don’t let them fool you with a false sense of need.
• 2012 City sales tax revenue outpaced projections by $160,000, meaning instead of the $6.6 million budgeted, the city can anticipate $6.8 million.
• The unexpected boon to the city supplied by Buccaneer Alaska’s jack up rig at the Deep Water Dock deepens pockets by $45,000 last month and another $45,000 due at the end of this one. Granted, that money is destined for the Port and Harbor Enterprise fund. But it means fresh revenue for a city-owned asset heavily dependent on rate payers.
• The jail house contract from the Alaska State Troopers has gone up $200,000 over previous years. The dispatch position costs, according to Zak’s estimate, $70,780.
Many cities across the nation recognize sales tax on food as a discriminatory tax. It lands on poor and rich alike in unequal burden. For that reason, cities such as Philadelphia, Pittsburgh, Boston and New York City don’t change it. Each year for the past three years, the number of people needing food stamps has risen on the Kenai Peninsula, last fall by 38 percent. The Homer Community Food Pantry and Share the Spirit report higher numbers of families and individuals seeking help. No doubt the poor, or simply struggling, are among us.
The beneficiaries of the estimated $700,000 that would be generated – much of it from middle income people who aren’t faring so well – is to be justified by the good it might do for the City of Homer through depreciation accounts and in other ways as not yet set in a solid plan. The depreciation accounts, in this case, sock money away for times when city buildings need repair, buildings like city hall, public works and the animal shelter.
All well and good, but let’s take care of our families first by letting them keep the 4.5 percent from the city and the 3 percent from the Kenai Peninsula Borough in the form the tax holiday that totals 7.5 percent.
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