Homer, Alaska - News - Growth, revenues slowing, says city's finance director 08/27/08

Story last updated at 9:44 PM on Wednesday, August 27, 2008

Growth, revenues slowing, says city's finance director

By Aaron Selbig
Staff Writer

The population of Homer is getting older while wages, school enrollment, real estate sales and consumer spending in the city are stagnant or in decline.

That was the grim picture painted by city finance director Regina Harville as she presented a report on revenue projections for fiscal year 2009 before the Homer City Council at its Committee of the Whole meeting Monday.

The report, based on projected FY 2008 revenues, says Homer is not seeing the same level of growth as in recent years, particularly in the real estate market. It says there are about the same number of real estate transactions taking place 58 in 2008 compared to 67 for the same period last year but there are fewer buyers and more inventory.

Since 2002, when Homer's population grew by 775 people due to annexation, overall growth has slowed, according to demographic data included in the report. In 2007, the last year for which figures are available, Homer grew by only 48 people.

"In the last year, we have only 14 new water customers. I take that to mean we're not seeing much growth," Harville told council members.

At the same time that overall growth has slowed, the median age of Homer residents has increased, from 32.4 in 1997 to 38.7 in 2007, the report says, and enrollment in local schools has decreased from 1,412 students to 1,135.

"Median age really affects our growth the most. It shows us that this area is becoming less conducive to young people coming here looking for jobs," said council member Mike Heimbuch.

The unemployment rate for that same 10-year period has decreased by more than half from 13.6 percent to 6.7 percent but wages have not kept pace, according to Alaska Department of Labor statistics included in the report. The average annual wage for Homer workers in 2007 was $30,795, nearly $4,000 less than the high mark set in 2004 and roughly the same as 1997 wages.

"So there are more jobs but they are lower paying jobs. That really tells the story of America's economic situation right now," said council member Beth Wythe.

Harville also presented an analysis of consumer spending habits as part of her report. In 2007, Homer consumers spent less on "discretionary" items like clothing and recreation than in the year before and more on food, medical care and housing.

Council member Dennis Novak wondered how national trends in consumer spending would affect tourism in Homer. Because Alaska vacations for this year were planned a year ago, next year's tourism numbers might be even lower, he said.

Harville projected that FY 2009 city sales tax revenues would face a shortfall of about $339,000 while utility revenues would come up short of expectations by $596,000. Some of that shortfall will likely be offset by increases in property tax revenue, she said. The bottom line, said Harville, is that revenues for 2008 are not going to live up to expectations, and the council will have to budget for FY2009 carefully.

Harville plans to have a draft proposed budget, including data on city expenditures, ready for the council at their regular meeting on Sept. 22.

"Expenditures are going to be higher than we expected. There are definitely going to be shortfalls this year that we weren't anticipating," said Harville.

Mayor James Hornaday noted that several local nonprofit organizations are planning to ask for increased city funding for FY 2009. He wondered how the council, considering the new revenue projections, would be able to maintain the current level of city services and funding of nonprofits.

"They used to say that the world could have a depression and Homer wouldn't even know it. I don't know if that's true anymore," said Hornaday.

At its Monday meeting, the council also:

* Heard testimony from members of the group Friends of Woodard Creek and Karen Hornaday Park. The group of six citizens spoke before the council about the need for new trails and other improvements in the park and for the restoration of Woodard Creek. Resolution 08-92, "supporting the idea of trail and other park enhancements" in Karen Hornaday Park, was passed by the council later in the evening.

* Heard testimony from Tom Crafford, mining coordinator for the Office of Project Management and Permitting, Alaska Department of Natural Resources. Crafford updated council members on the plans of the Pebble Limited Partnership Company in the area of the controversial Pebble Mine. The company is in "exploration mode," said Crafford, and is looking for alternatives for the disposal of mine tailings. The company also has begun to post results of their environmental studies on its Web site, said Crafford.

* Viewed a 10-minute video, "Voices From Bristol Bay," presented by Lisa Reimers, chief executive officer of Iliamna Development Corp. The video presented different viewpoints on the Pebble Mine project from citizens of Bristol Bay communities.

* Appointed Nikolai Yakunin to the Economic Development Advisory Commission.

* Passed three ordinances that roll back the city's size limitations on commercial property to pre-2004 levels, necessary in order to comply with the June 20 Alaska Supreme Court ruling in the case of Griswold v. City of Homer.

* Appropriated $70,000 for the purchase and outfitting of three new patrol cars for the Homer Police Department.

* Accepted a $5 million loan from the Alaska Department of Environmental Conservation for the construction of a new water treatment plant.

Aaron Selbig can be reached at aaron.selbig@homernews.com.

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