Story last updated at 5:21 p.m. Thursday, June 13, 2002

City's "lower" tax rate cuts residents both ways
by Carey James
Staff Writer

City residents with a $100,000 home living in the old city limit boundaries will pay the city $50 less this year in taxes following a 0.5 mill rate reduction. Those living in the newly annexed area will pay $38 more in total taxes.

The Homer City Council passed a resolution Monday night setting the tax rate for this year at 5 mills, or $5 per $1,000 of assessed property value, for the pre-existing city residents and 3.625 mills for the new area.

Before annexation, residents in the newly added part of the city only paid at Kenai Peninsula Borough rates. Now, they pay the new city tax, but do not pay taxes for borough roads or emergency services.

Despite initially having passed a budget with a slight deficit, based on new revenue projections, the city now expects to be in the black by $138,556, even with the tax-rate reduction.

While the majority of City Council members championed the idea of the 0.5 mill rate reduction for city residents prior to the annexation, Councilman Kurt Marquardt offered a single voice of unease regarding the proposed cut in tax revenue.

"I'm concerned that there are things that the 0.5 mill could be spent on like youth recreation facilities such as a skateboard park," Marquardt said. He added that the fire, police and public works departments are often turned down on funding requests. "I'm concerned that we don't try to cut it too thin. I hope this works out for the city and all of us who live in this community."

While City Manager Ron Drathman and others suggested that large projects should be paid for with bonds, which some suggested could be paid back using a seasonal sales tax, Marquardt said that was a discretionary policy, and one that wasn't followed with some expenditures, such as the purchase of the Homer City Hall.

"I'm all for a property rate reduction," he said. "I just want to make sure all our needs are being met."

Councilman John Fenske said he saw the tax break in a different light, however.

"I find this evening is a meeting that provides some closure when dealing with taxation issues," Fenske said. "This is pretty darned exciting."

Drathman, who presented the council members with the tax-break proposal during an afternoon session of the council, said offering all the city services for $176 more than residents of the Kenai Peninsula Borough pay in taxes per $100,000 is a good deal.

"To me, that's a tremendous bargain," he said.

Mayor Jack Cushing said with the possibility of the state imposing a sales tax in the future, Homer is well advised to lower its city sales tax so it doesn't become one of the most taxed areas in the state.

Fenske said the tax break helps relieve the tax burden residents of the city have long shouldered.

"To me, it looks like a slam-dunk deal," he said. "It's only reasonable for us to be trying to mitigate some of the expenses paid by the city for years. To get overall relief to the people inside the city is not only time-critical but it's overdue."

The tax reduction is only for this year, although some said it was the city's hope to keep the city tax rate at 5 mills.

Marquardt concluded the discussion by saying he guessed most folks in the annexed area would have paid $38 to vote in last year's city council elections. This year, they will have that chance.

In an action-packed evening, the Homer City Council finally approved a list of 20 projects said to be the council's collective top priority list. It took the council two months to agree on the list, and in the end, the list was submitted without individual rankings for each project.

The top five priorities, however, were clear from the city manager's compilation of rankings. They include a new public library, an animal shelter, large structures as part of a conditional-use ordinance, steep-slope development and the establishment of a town square and college, with or without the library, in the center of town.

The council discussed the long-postponed idea of surveying city residents that was brought before the council last year by Councilman Rick Ladd. Now armed with a list of the top 20 priorities, council members suggested the survey include questions about water use and zoning issues.

Ladd said after the meeting that he hopes the survey will take place this fall.

The council approved the so-called "box store" ordinance, requiring buildings larger than 8,000-square-feet to be covered with a conditional use permit which requires some approval from the city.

Interpretations varied on the ordinance, from Fenske, who described the message as "a very friendly way to say we're ready for you to come and do business, but ask us what our thoughts are," to Ladd who said, "We're not going to hand our community over to someone else. We are going to keep control of it."

In other news, the council postponed action on an ordinance requiring funding of works of art projects in city buildings and projects for a month until ordinance sponsor Councilman Mike Yourkowski returns.