City Manager Koester says Homer is faring the state fiscal crisis well

Mar 14, 2018

Homer City Manager Katie Koester speaks to Homer residents at a Homer Chamber of Commerce luncheon.
Credit Aaron Bolton, KBBI News

Homer City Manager Katie Koester told Homer residents Tuesday that the city is keeping its head above water as the state fiscal crisis and recession continues.

Koester gave a State of the City speech to residents during a Homer Chamber of Commerce luncheon at the Best Western Bidarka Inn.

She highlighted Homer’s diverse economy and steady population growth.

“We’ve seen a real steady population growth over the last five to seven years, about 1.3 percent. Again, I feel really good about that because that’s a healthy stable growth,” Koester told audience members. “We’re not the Mat-Su that’s busting at the seams, needing to build new roads and new schools, but we’re healthy and really sustainable.”

Residents 60 years and older and those 35 and younger accounted for most of the growth. Homer also saw a 10-percent decline in the 40-to-59-year-old population during that time.

Koester said the overall population growth in recent years has helped keep city revenue stable.

“We’ve seen a little over 1-percent growth in property tax returns and 1 to 2 percent in sales tax, and I’m happy to say that between 2016 and 2017, we’ve actually seen a 2-percent growth in sales tax returns, which hasn’t been experienced around the state of Alaska and it hasn’t been experienced around the borough,” Koester explained. “When you look at our returns, really our summer months and our visitor industry has really helped Homer.”

Koester noted that the city has made some cuts to its budget since 2015 and eliminated six positions. She also said the city has kept the growth of its operating budget at 1-percent annually.

Koester also focused on the challenges the city still faces such as a roughly $1.2 million budget gap it will grapple with next year. In 2015, residents voted to divert tax revenue dedicated to road and trail capital projects for three years.

Voters also approved allowing those funds to be used for road and trail maintenance last fall, which will free up funding in the general fund when the diversion of those tax dollars ends in 2019. But the move is expected to take care of roughly half of the budget gap.

“You know, I really feel like 2019 we’re going to be ok. We’re going to have less money to put towards those major maintenance projects, those deferred maintenance projects, which are so critical, but I think the voters in this community said take care of what you have,” Koester said.

Koester also took a moment to highlight priority capital projects such as a cost-benefit analysis on a potential harbor expansion and a new police station.

She updated the public on the council’s work on the station. Currently, the council plans to ask residents to pay for about $5 million of the roughly $7.5 million project. It will hold its next work session on the project on March 27.