Homer confronts financial limits

The city of Homer convened a town-hall meeting Monday evening. Part of agenda was to discuss the city budget. But the focus was on a bigger issue: What services does the city need to provide and how will it pay for them over the long term?

The crux of the matter is that the public, based on past votes, wants services but does not want to pay for them.

About 100 people came to the meeting, a standing-room-only crowd ready to get serious about stark choices. In general, those who showed up liked existing services and were willing to pay more taxes to keep them.

Opening the meeting, Mayor Beth Wythe was blunt. Voters consistently opt for lower taxes but resist cuts to services. They ask the city to reduce payroll. Homer has tried to honor their wishes, but now the city is sinking into dire financial condition. The 2008 vote to remove taxes from nonprepared food during non-summer months pushed revenue down too far, a problem now exacerbated by the loss of revenue sharing during the state’s own fiscal crisis, she said.

Austerity has gone as far as it can. Further cuts require restructuring and sacrifice, she said.

Wythe, City Manager Katie Koester and others described the growing threats associated with years of belt-tightening. The city has lost millions of dollars and compromised its future capabilities.

For 2016, the city faces an estimated 10 percent gap between revenue and expenses. The projected shortfall will be between $1.1 and $1.3 million, Koester said.

Dave Lewis, who has served on the city council since 2008, commented, “Since that time we’ve done nothing but cut. … You just can’t cut your way out of all these problems and still have a community.”

In the 2015 budget, the city hires no new personnel, has no cost-of-living increases, and, for the third year, makes no transfers to depreciation and fleet reserve accounts needed to assure the ability to address future needs.

It postpones major projects such as dealing with deteriorating infrastructure at the public safety building and the Homer Education and Recreation Complex (HERC).

One major concern is that employees are reaching their breaking point and not getting a fair deal. Managers described how Homer’s workers get paid less than counterparts in other cities, work extra hours, struggle with failing equipment, now have to pay $400 per month towards health coverage and have only gotten three cost-of-living-allowance increases in the past 20 years. Staff shortages are especially critical in public safety, where the city has trouble keeping dispatchers and sometimes only one police officer is on duty.

“We cannot have our employees working in an unsafe environment,” Wythe said.

Another major concern is future needs. The city is skimping on maintaining or replacing aging buildings and equipment. The budget reserve account is now at the minimum acceptable level and the city has no money to add to it for the foreseeable future.

“That is the area where we are sadly lacking, going forward,” Wythe said.

Despite the grim situation, the public and the city officials put forth an array of ideas to make it better. Most of the discussion focused on increasing revenue rather than cutting expenses.

Informal polling of those present found support for some potential tax increases, specifically a bed tax for hotels and B&Bs, raising the borough sales-tax cap from $500 to $1,000 and raising the city’s sales tax by one half of one percent. The audience split on whether to raise parking fines or to reinstate the sales tax on food during the off season. It opposed doing away with the city’s version of the residential property-tax exemption.

Several people expressed interest in getting people outside city limits to contribute more for city services they use. Encouraging more taxes borough-wide could even the playing field and not leave cities at a disadvantage. A bed tax could bring in more money from visitors.

Others suggested looking even farther for financing in the long term, such as working on national or state issues to control health-care costs or redirect funding that subsidizes oil companies.

Koester said the city has yet to investigate less orthodox revenue streams such as economic development ideas, sin taxes, taxing marijuana or transfers among accounts. Wythe noted that partnerships and grants could give the city a boost.

Nearly everyone expressed support for the current level of city services and did not want cuts. Views on funding nonprofits were more diverse, but they still garnered strong support. Commenters noted that nonprofits perform contract services for the city and leverage more business in town.

The only projects criticized were the Woodard Creek restoration and building a new public safety facility. People suggested the latter is important, but should be scaled back.

Koester, city staff and elected council members worked through an agenda carefully structured to cover a huge amount of information and maximize public input during three intense hours. To facilitate the process, they passed out digital keypads that allowed participants to answer survey questions on the spot and see the results tallied instantly on the display screen. They also distributed colored stickers people used to label priorities on wall charts.

Koester reviewed the city’s finances, briefing the audience about revenue drops, department expenses, cost-saving efforts so far and the outlook for next year. Break-out sessions followed, with department heads manning tables set up throughout the council chamber area where participants could ask questions, make suggestions and put their dots on the charts. 

For each table, an appointed “scribe” reported back to the entire assembly on the gist of public preferences and comments. The last phase featured open-ended comments from the public and the city council members.

The discussion focused on the $12 million general fund. The port and harbor, and the water and sewer services were excluded because they are funded separately through fees.

The city also has an online survey, titled “Closing the Gap” that polls citizens on their preferences on allocating budget resources. At the meeting, Koester said the survey already had more than 300 responses and would remain available through Aug. 5. The survey and more info about the meeting are available via the city website at http://www.cityofhomer-ak.gov/citymanager/closing-gap-town-hall-meeting-....

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