Commissioners review proposed city budget, tax increases
City Commissioners got their first look at the budget proposal during their June 21 work session.
The budget, proposed by City Manager Greg Doyon and staff, includes taking the full property tax increases available to the city, using a portion of the fund balance and some CARES Act funds to balance the budget.
The city didn’t raise property taxes through the inflationary factor of permissive medical levy for the last two years.
Municipal governments are limited by state law on how much they can raise taxes annually and the rate is half of the three year average of inflation. That typically doesn’t generate much in terms of new tax revenue for the city, but as the national inflation levels rise, those figures could also increase.
If the commission approves taking the full inflationary increase, that’s an $8.36 increase on a house with a $100,000 taxable value, according to the city finance office. It’s a $16.72 increase on a house with a $200,000 taxable value.
City staff are also proposing to take the full permissive medical levy, which would add $248,305 in new revenue, with an impact of $3.23 on $100,000 house and $6.47 on a $200,000 house.
For comparison, the city is projecting $22.9 million in tax revenue for the upcoming budget in the general fund, the proposed police and fire budgets are $27.4 million.
If the city takes the full inflationary factor, plus the estimated $400,000 in newly taxable property and an estimated $294,004 in the entitlement share from the state, the city is looking at about $1.3 million in additional tax revenue, according to the finance office.
Doyon is recommending using about $1.6 million in CARES Act funds and a portion of the undesignated fund balance to balance the budget.
Without using raising taxes this year, Doyon said the budget would have a $2 million shortfall.
Doyon told commissioners that if they chose that option, they could direct him to reduce the budget, or use the fund balance, which would take it down to about 15 percent. City policy is to maintain a 22 percent fund balance in the general fund, which is about a month’s worth of operating expenses in the event of emergencies, cash flow issues, or other unplanned incidents.
Doyon said in that case, he would go to the list of general fund subsidies to other city funds, such as the library, health department, animal shelter, swimming pools, recreation center, civic center events among others, and eliminate those, which total about $1.8 million in the proposed budget.
Then he’d go to the departmental above and beyond requests to make more cuts.
“I’m pretty certain you’d have to cut personnel to meet that number,” Doyon told commissioners.
Doyon said that staff tends to budget conservatively, in part because of what has happened for the last few years due to the COVID pandemic and its impacts.
He said they’re using the ARPA and CARES federal COVID relief funds to make one time purchases or major infrastructure improvements so that they don’t have to address budget shortfalls with the fund balance.
“We’re really kind of planning for the next couple of years with this budget” to address the commission priorities but also be in better financial position for next couple years, Doyon said.
A number of factors are driving the budget, including cost increases, inflation, and a COPS grants that is phasing out and the city’s portion is increasing, staff turnover in the police and fire departments that cause high training and equipment costs, Doyon said.
Staff gave commissioners a list of products the city purchases that have had significant cost increases. Some of them include:
- Chlorine: last year’s cost was $710, now it’s $2,178, a 207 percent increase
- Diesel fuel: last year’s cost was $1.44 a gallon, now it’s $5.10, a 254 percent increase
- 6-inch and 8-inch water mains per foot: last year’s cost was $56, now it’s $149, a 168 percent increase
- liquid asphalt: last year’s cost was $428, now it’s $899, a 110 percent increase
Doyon said that looking ahead to the following budget yet, commissioners need to be mindful about managing the fund balance due to unknown economic conditions since there will be increased costs, new probationary firefighters, implementing the crime task force recommendations, newly negotiated labor agreements, the new recreation center operations and a second municipal judge, among others.
Commissioner Rick Tryon asked if they could take a lower amount of the inflationary factor and permissive medical levy and Melissa Kinzler, finance director, said they could.
Staff is recommending using the full amount to avoid significant cuts and to be able to fund needed resources, particularly in public safety.
Staff is using ARPA funds for several public safety needs, including replacing the oxygen tanks firefighters use since some have aged and failed testing.
Commissioners have approved a number of tax abatements in recent years that reduce the city’s tax revenue temporarily.
Commissioners recently increased sanitation fees and staff will be recommending utility rate increases this summer, as well as increases for the boulevard district, Portage Meadows and the street lighting district assessments. There is no proposed increase to the park maintenance district or street maintenance assessments.
Doyon said staff is also looking at increasing development review fees for the planning department. He said they didn’t raise them before out of concern for being business friendly, but now they’re having to subsidize that fund with general fund support because they didn’t adjust them.