(June 7, 2013) Despite an arduous, repetitive and not unexpected debate this week over parking meter revenues, City Council passed its 2013-2014 fiscal year budget Monday night.
The five-to-two vote for approval fell on predictable lines, as Council members Brent Ashley and Margaret Pillas objected to what Ashley described as the majority membership’s “clearly out-of-whack” spending priorities.
This year’s budget will feature a property tax rate of 47.2 cents per $100 of assessed value, a 1.35 cent hike over last year’s rate of 45.85 cents. This rate is exactly one cent over the tax rate that would be necessary to generate the same income this year as last, given fluctuations in property values, a number which is known as the constant yield level.
However, City Council engaged in a hot debate this time last year over whether or not to reduce the 2012-2013 budget year’s tax rate by a cent, and instead take the money out of the town’s standing cash reserve.
The move was eventually approved by the council’s then-majority faction, but its opponents objected that the roughly $850,000 depletion of the city’s standing reserve was not worth the average of $20 that the reduction would save taxpayers.
This year’s extra cent increase is essentially a return of that funding, according to the former council minority, which gained majority control in the last election.
This year’s budget will also maintain the town’s reserve balance at 15 percent, meaning that the city’s operating account would be projected to maintain around 15 percent of the value of the town’s total operating budget of around $78 million per year.
This ratio is significant, since the town relies on a standing account balance to bridge the time gap between when expenses are incurred and when revenues are generated. Depending on the municipality and its tax base, towns and cities around the country generally maintain balances of at least 10 percent.
However, Ashley contended this week that the current fund balance level was inadequate given the city’s mounting debt obligations and future cost increases, including nearly $1 million in employee raises for the current budget year that will have a similar impact on 2014-2015.
“You voted to take money out of the fund balance last year to give a bonus to the employees,” Council President Lloyd Martin said. “You can’t have it both ways.”
But Ashley said that the $1,000 bonus given to employees last year was a much more effective means of compensation than percentage raises.
“To say that the employees got nothing for the past few years, as you have, is not accurate. If you make $50,000, you got a two percent raise last year,” Ashley said.
Instead, Ashley said the raises scheduled for the coming years, a product of negotiated contracts with the city’s police and fire unions, will result in lop-sided compensation. Some employees in high-paying positions, but on the low end of the salary scale for those specific positions, will get raises of up to 20 percent due to wage adjustments being weighted, Ashley said.
Local property owner Tony Christ, a frequent commenter at council sessions, said he supported Ashley’s concerns due to the level at which the town’s general fund is encumbered by fixed expenses.
“Debt service and pension liability constitute fully 26 percent of the general fund,” Christ told the council. “And you’re going to add another $10 to $12 million of bond debt this year due to the capital projects you’ve already committed to but don’t have the money for.”