• Budget time rolling in means public money spending debates ahead
By Naomi Klouda
The jack-up rig Endeavour’s long stay at the Homer dock means an extra paycheck this year for an unlikely source: the city’s nonprofits.
The Homer City Council passed a resolution at Monday night’s council meeting that grants $9,054 to the Homer Foundation. The foundation doubles and triples investment income that supports the food pantry and a lengthy list of other nonprofits.
“The money that is going to the Homer Foundation is actually property tax money from the rig that the city received,” City Manager Walt Wrede said. “The council decided that this property tax money was probably a one-time windfall and decided to deposit it in the permanent fund. The permanent fund ordinance says that when the city receives windfall money, that five percent goes to the City of Homer Fund at the Homer Foundation.”
The rig’s property taxes of $181,087 isn’t slated for city coffers or lumped with other property tax income. It’s essentially going into savings for rainy day use. This one-time revenue comes on top of the dock tariff fees paid to the Port and Harbor. Harbormaster Bryan Hawkins said that amount of $576,815 goes to the port’s enterprise fund to pay for improvements and other bills.
The donation to the Homer Foundation forms the most immediate way Homer people will directly benefit from the oil rig’s lengthy stay this winter at the dock.
A growing group of people are questioning how the city uses these one-time “windfall” fund, such as from the rig’s property taxes. Homer Voice for Business, a consortium of about 30 businesses, is questioning the new sewer rate structure that increases the cost for large quantity water users. At the last council meeting, Mike Dye advocated spending $150,000 of the extra money from Buccaneer Energy’s rig to offset the ailing water-sewer funding issues. His testimony joined a commercial fish processor and a restaurant owner who contend they anticipate the new rates will adversely impact their bottom lines.
As a Homer Voice for Business spokesman, Mike Dye will be the featured visitor at the next city council meeting on Sept. 9 to talk about the group’s formation and causes.
Mayor Beth Wythe responded to the question of subsidizing the water-sewer fund by saying it is a service to customers “that needs to pay its own way.”
In response to Homer Voice’s concerns, Councilman Bryan Zak proposed an ordinance asking for a permanent task force to take another searching look for water-sewer billing solutions.
His ordinance didn’t make it to introduction Monday night after being shot down when Councilmembers Barbara Howard, Francie Roberts and Mayor Beth Wythe objected. Roberts advocated waiting until after January when the new fee structure will be applied in billing. Wythe said the city feels a money drain funding the many commissions and committees. The expense comes through the use of clerk overtime as they take official minutes for meetings as well as legal notices for public testimony. She also wants consumers to give the rate structure a chance, once it goes into effect Jan. 1.
But Zak was willing to plead the case.
“I think it’s only fair based on the water and sewer rates. There are issues here with our rates. Let’s not say ‘no’ tonight. Give it a chance and let’s get some public input on it. At least for it to be introduced,” he said. “Public input is not being received. We will do a big disservice if we shut it down tonight without giving it the opportunity to be heard.”
The measure failed in a vote. Zak and Lewis voted yes; Howard, Roberts and Wythe voted no.
Budget discussions start soon
Just as the city prepares to dig into the 2014 budget, there is hope on the horizon that other aspects of the economy experienced extra boosts, like the rig property taxes. Whether Homer businesses saw a more lucrative summer than the lagging past few, depends on a number of unknown numbers that won’t be seen until November, Wrede said.
It’s time to dig into the City of Homer’s annual budget, but lacking the sales tax numbers makes for a bit of “flying blind,” Wrede told the city council Monday night.
“I have heard a lot of anecdotal stories (about how summer visitors boosted the local economy), but we won’t know until we see the third-quarter’s numbers,” he said. “We try to make a reasonable, conservative guess.”
There’s also a building boom evidenced not only in the gasline construction, but also in the number of construction zoning permits awarded, Wrede said.
But from the numbers collected in the first quarter, sales tax is down substantially over what was collected the two previous years. The summer’s industry, however, and high visitor numbers, could tip the charts.
Each year the city uses its previous years’ data to predict the trend, aiming at the lower end of a projection, Wrede said. For 2013, Homer came in with $4.76 million sales tax revenue. That funding, and property taxes, account for the bulk of what has grown to exceed $11 million annual budgets. Last year’s property tax collection amounted to $3 million and is a more predictable number. The moving target of sales tax is the number to watch since it accounts for more revenue.
Council members at the Monday night meeting asked new Finance Director “John” Xhiyong Li to also gather numbers to report to them on the amount of revenue lost through property tax exemptions and exemptions for the elderly. They also requested projected revenue lost from the October to June sales tax holiday on non-prepared foods.
“It’s important for us to know those numbers,” Howard said.
Meanwhile, at the Homer Port and Harbor, additional revenue came in from Buccaneer Energy even after its jack-up rig moved to drilling work off Anchor Point this spring. The Homer port continued to act as support for Buccaneer at the dock.
“It made sense to use Homer as the point for picking up and dropping off. We’ve had the three tugs coming and going for supplies – provisions for drill pipe and drilling muds,” Harbormaster Hawkins said. “Now that they will be moving the rig up north, they’ll use the dock at Nikiski.”
That port and harbor revenue hasn’t yet been tallied, he said.
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