Homer annexation leads to boost in municipal revenues

Posted: Friday, June 27, 2003

KENAI (AP) Figures released by the Kenai Peninsula Borough show a significant growth in Homer's gross sales, probably due to a decision to annex more than four square miles of property.

Homer annexed 4.58 square miles in April of last year, expanding its area by 28 percent. At the time, city officials expected the annexation would lift municipal revenues. Figures released recently through the borough's Community and Economic Development Division appear to justify those expectations.

The figures, covering the first quarter of 2003, show Homer's taxable sales increased 19.2 percent over figures from the first quarter of 2002. Gross sales increased 13.5 percent.

The annexation expanded Homer's city boundaries to include a fairly densely populated and business-rich area of the unincorporated borough.

While Homer's figures rose dramatically in both categories, the Kenai Peninsula Borough recorded a mixed bag of sales results. Taxable sales rose by 2 percent, reaching $135.2 million, but gross sales fell by 10.4 percent in the first quarter of 2003 compared to the same quarter the previous year.

It was the taxable sales increases in Homer and other cities that helped push borough-wide taxable sales into positive territory.

Two weeks ago, Homer Director of Finance Dean Baugh said the city did not have a clear indication of the impact of increased sales taxes from the newly annexed area and was awaiting the borough figures.

Received last week, those figures provide a useful snapshot. In 2002, first-quarter taxable sales in Homer hit $18.6 million, which jumped to $22.2 million in 2003. Homer has a 3.5-percent sales tax, meaning that the $3.6 million difference generated roughly $126,000 in added tax revenue.

''We can attribute part of that to annexation,'' Baugh said.

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