At Monday night’s Homer City Council meeting on the eve of a special election to recall three council members, the council drastically transformed its budget by zeroing out the $2.3 million Homer Permanent Fund. The drama of that action highlighted the council’s indecision on a major city capital project, not yet endorsing the recommendation of the Police Station Task Force to build either a $6 million or $9 million police station on Grubstake Avenue.

The Permanent Fund action, Ordinance 17-23, eliminated the fund and appropriated $1.2 million to pay off in full the balance of a U.S. Department of Agriculture Rural Development Loan at 4-percent interest to build the Homer Public Library. The rest of the Permanent Fund, $1.1 million, was appropriated to the Police Station Fund.

An earlier council created the Permanent Fund after receiving a windfall from the Exxon Valdez Oil Spill settlement. When the city set up the fund, it anticipated a larger amount, but that kept getting cut back as the lawsuit moved through appeals and to the U.S. Supreme Court. Unlike the Alaska Permanent Fund, the Homer fund stagnated, barely earning 1 percent.

Former council member Ray Kranich was on the council when the Homer Permanent Fund was created. In a public hearing, he said he opposed eliminating the fund.

“I think it’s extremely shortsighted to deplete those funds for something that’s not an emergency situation,” he said.

He also said it didn’t make sense to appropriate part of the fund to the police station when city voters rejected a bond in 2016 to build a $12 million station.

Coletta Walker disagreed. Paying off the library loan would save $1 million in interest.

“It makes good sense to pay off the debt you’ve got,” she said. “We’ve got the money and we’re spending more in interest than we’re making in a savings account. This is a rainy day. We’re flooding in the monsoon.”

Council member Donna Aderhold said it made sense to use the EVOS funds to pay for projects like a library and a police station — something the city of Cordova did with its EVOS settlement.

Council member Heath Smith agreed.

“I appreciate what Ray said to us, but we’re holding on to a dream here and we have to let it go,” he said. “We’re not even making enough to inflation proof.”

Council members Shelly Erickson and Tom Stroozas expressed concern that the $1.1 million put in the Police Station Fund would be wasted on design and planning work and never go to pay for actual construction costs. Erickson introduced an amendment restricting the money “to the actual construction of a police station.” That amendment passed 6-0, as did the main motion.

The council stalled, though, on where to go with the Police Station Task Force recommendations, an issue considered in its work session and Committee of the Whole. The task force had been directed to come up with ideas by last month so the council could possibly put on the ballot again the question of funding a new station. Everyone agreed that the aging, substandard police station on Heath Street needs replacing. Homer Police Chief Mark Robl said the station might last another 5 years. No one could agree on how to build and fund a new station.

City Manager Katie Koester proposed coming up with something “shovel ready” so that if national infrastructure improvements proposed by President Donald Trump happen, the city could put its project on the list.

Aderhold said a lot of questions remain about the project. What do residents think about the new site? She proposed a community meeting similar to one in 2015 when the city looked for guidance on balancing its budget. Council member David Lewis proposed an advisory vote. Smith questioned how useful a community meeting might be and how reflective it might be of the voters’ intentions. He also noted that the $6 million and $9 million options would increase operating costs.

“It’s hard for me to believe with all the unanswered questions we want to put before the voters an option that will cost government more,” he said. “If they drop $10 million on our porch, can we afford to run a $10 million building? The answer is no!”

Michael Armstrong can be reached at michael.armstrong@homernews.com.