By Sue Botos
With the school board set to place an operating levy on the March ballot, residents may also be asked to dig further into their pockets by city officials.
At last week’s budget hearing, Mayor Pam Bobst addressed ways in which a projected $1.2 million deficit for the coming year could be offset, and an increase in property tax was one of the ideas suggested. In her opening remarks, Bobst stated that, through some number crunching, the budget, which is currently in its seventh draft, has had a deficit reduction of $1.3 million from original projections.
Among the drains on city finances will be an expected loss of $300,000 in state funds and an estimated $1.9 million annually once the estate tax disappears in 2013.
Bobst reported that property tax valuation, which had held relatively steady at $720 million between 2006 and 2008, had fallen in recent years. The figure now stands at $690 million.
“There has been considerable investment in the city, and we anticipate seeing that total valuation tick up,” said Bobst, referring to both residential and commercial interests. She added that during a discussion with school Superintendent Michael Shoaf, it was brought up that the county board of revision has a three-year backlog of property owners trying to have their property taxes reduced.
Bobst further explained that a 1-mill issue would amount to a $30 yearly property tax increase per $100,000 of home valuation.
Pension funds for police and firefighters were also discussed, with Bobst reporting that $400,000 of this fund is generated by an inside, or nonvoted, amount of .3 mills, which is supplemented by $840,000 from the general fund
“The thought process may be that we place on the ballot a .5-mill each for fire and police protection in outside or voted millage,” said Bobst.
“That $840,000 of relief from the general fund is huge when you’re talking about a deficit of $1.2 million,” stated Bobst. She stressed that the ballot suggestions were only options requiring further review from City Council.
Bobst said that property and income taxes make up more than half of the budget. It is projected that the taxes will amount to a total of $8 million of the upcoming financial plan.
“We have a very conservative revenue budget, and we’re meeting that budget. That does not mean we are meeting those revenue numbers we have had in the past years, especially pre-2008,” stated Bobst. “It’s important to be mindful that we are certainly down $600,000 to $800,000 in income tax revenue.”
Several scenarios were mentioned by Bobst involving the raising of income tax and the accompanying tax credit to homeowners. The options discussed could result in as much as $1 million in income tax revenue. She urged council to mull over the options, considering the city’s tax rate is 1.5 percent, and many surrounding communities levy a 2 percent tax.
“The time is now to do that. Considering the estate tax and other pressures on the general fund, that would be a valid issue to be placed on a ballot,” she stated.
A $5 fee on license renewal for motor vehicles is another revenue-generating option proposed by Bobst. She reported that most communities already have the measure in place, and that it generates $82,000 yearly.
The outcome of phase one of the Sewer System Evaluation study, mandated by the state and federal EPA, will also play into the upcoming financial picture.
“That performance audit is a piece we can use,” said Bobst, adding that results are expected in January, but hopefully can be presented before that time.
“That’s a very high level picture, but it gives you some idea about where we’ve been and why the budget looks the way it does,” stated Bobst. She added that a combination of cuts, balances and cooperation from city unions has assisted in the process.
“We’ve done all we can do and now are faced with these extreme budget cuts and also requirements and mandates,”Bobst concluded.
City Council is expected to place the budget proposal on the first of three required readings at its Nov. 28 legislative session.