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According to information provided by the Kenai Peninsula Borough, the city's property tax revenues are up but sales tax receipts are down. And the cost of doing business is rising substantially as the prices of fuel and utilities continue to climb.
Using a combination of first quarter receipts and budget projections for the rest of the year, Homer's increase in property taxes is anticipated to be more than $142,000 above what was budgeted for.
That number could shrink, however, as taxpayers are appealing a large number of assessments.
Sales taxes, on the other hand, are coming in weaker than expected. If trends continue, the estimated shortfall is more than $80,000.
Making matters worse for the city's bottom line, the recent price increases in fuel, electricity, and water and sewer rates have added more than $310,000 to the city's costs. And that doesn't include the related price increases of other goods and services that will likely increase due to higher fuel prices.
The less-than-rosy news comes at a time when several tax relief measures were slated to be introduced on Monday.
The council has already scheduled a second reading this fall for a proposal to drop the city's property mill rate.
The council Monday added two more proposals to the list authored by council member Mike Heimbuch a residency incentive credit and a seasonal sales tax reduction but delayed second readings for both ordinances until Sept. 8.
The residency incentive credit program would essentially pay back a portion of the city's tax receipts to full-time residents of the city. The seasonal sales tax reduction would lower the winter sales tax rate by 2 percent.
Heimbuch said the new proposals are options that can be looked at down the road if the council decides to alleviate some of citizens' tax burden.
"It's going to be an ongoing discussion," Heimbuch said.
But the new data is already giving some council members pause about reducing taxes in the current economic climate.
Council member Beth Wythe said the job of the council is to maintain the finances of the city and safeguard its citizens investment. Cutting taxes may make council members feel good in the short term, she said, but it's more important to take a longer view of the situation.
"We need to be cautious," Wythe said.
In other news, the council:
* Approved a new liquor license for Beluga Lake Lodge.
* Reappointed Stephen C. Smith to the Transportation Advisory Committee and appointed Shelly Erickson to the Economic Development Advisory Commission.
* Postponed an ordinance that would have created the Scenic Gateway Corridor Overlay District.
* Approved a $17,791.20 contract for phone service to GCI, a contract for gravel supply to the Firm of DIRTT Co of Anchor Point and a $50,588 contract for upgrades to the fish grinder lift station to Tusk Corp of Homer.
Ben Stuart can be reached at ben.stuart@homernews.com.
