At a July 15 meeting, City Manager Sharon Citino presented the council with several tax rate possibilities along with details on what each one would mean in terms of funding city priorities.
Dig deeper
The city's current property tax rate is $0.437 per $100 valuation. Chief Financial Officer Terrence Beaman told council members they could go a number of different ways with the tax rate in FY 2024-25, depending on how many priorities they are looking to fund:
- The voter approval rate, which is the highest rate the city can adopt without going to voters for approval under state law, would be $0.4355 per $100 valuation. Adopting this rate would require the city to use reserves to fund some expenses related to capital improvements and fleet items, and it would reduce the city's fund balance by around $608,000.
- A tax rate of $0.4474 would allow the city to completely balance its budget without using reserves.
- A tax rate of $0.4591 rate would allow the city to fund its budget and all supplemental items in the budget without using reserves.
- A tax rate of $0.4766 would fund all supplementals while also allowing the city to add a projected $1 million to its reserves.
With the VAR tax rate, the proposed budget would also leave out a few expenses that Citino said are not necessary, but would better cater to what residents have asked for.
“We tried to maintain that tax rate that does not exceed the VAR, but in so doing we weren’t able to fund all the things we think are important to the community based on the feedback we heard in the citizen survey and through the strategic planning we did earlier this year,” she said at the July 15 meeting.
The city has $2.9 million in its contingency fund, which is the amount the city has in reserves above a 60-day emergency threshold, Beaman said.
By the numbers
City staff presented the differences in what taxes homeowners would pay under the VAR tax rate—$0.4355—compared to a tax rate of $0.4766, the highest of the four tax rate options presented at the meeting.
- Taking tax exemptions into account, the owner of a $500,000 home would pay $196 in additional annual property taxes under the $0.4766 rate compared to the VAR rate. The number falls to $130 for homeowners ages 65 and older.
- The owner of a $1.5 million home would pay an additional $587 under the higher rate, or $521 for those ages 65 and older.
The budget also assumes a 3% increase in sales tax revenue—roughly $92,000—as well as increases in fees for some services, such as water, wastewater and solid waste. City officials have discussed adding a new stormwater fee, but plans have not yet been adopted and conversations are ongoing.
City staff would get a 3% "step" pay increase under the draft budget proposal, and the city would also eliminate a cap on longevity pay that currently goes into effect when an employee reaches the 25-year milestone.
Officials also are drafting a new paid paternal leave policy, though details have not yet been made public. A draft should be released soon, Citino said.
General fund expenses in the draft budget came out to almost $28 million, or about $900,000 more than city projections last year at the start of FY 2023-24 budget talks. Most of the increase could be tied to the 3% step increase, Beaman said.
Zooming in
The VAR budget would fund several projects using general fund reserves, including the replacement of lighting and installation of netting at Feld Park, and updating the city's 10-year parks master plan.
However, city staff recommended a number of supplemental items that officials said would require a higher tax rate. Several supplemental requests related to improving police and fire services and advancing economic development efforts, including:
- $318,000 in recurring costs to add three police officers
- $96,600 in recurring costs to add a full-time fire marshal position, as opposed to the current structure where the assistant chief is also the fire marshal
- $100,000 in nonrecurring costs to hire a consultant to help implement zoning code changes recommended in a recently updated comprehensive plan
- $50,000 in nonrecurring costs to hire a consultant for economic development
The city also aims to launch an economic development strategy and would hire a consultant to help develop it, Citino said.
“It’s great to have zoning; it’s great to have these ideas, but if you’re not going to go out there to get [the development you want], it’s really tough, because you have to wait for it to come to you," she said. "Sometimes what comes to you is not exactly what’s in your vision.”
Also of note
Other projects covered in the VAR budget by the city's Vehicle, Equipment and Technology fund include:
- $333,000 for a new garbage truck
- $364,000 for a new ambulance
- $353,000 for four marked patrol cars, including one new car and three replacement cars
- $65,000 for one unmarked criminal investigation unit car
Moving forward, council members will review the budget draft and determine what changes they would like to make as well as what tax rate makes the most sense for what the city is looking to accomplish.
City officials are also considering calling a bond referendum in November to help fund stormwater and wastewater projects. If the city does more forward with such plans and voters approve the bonds in November, staff would account for it in the tax rate set in 2025-26, Beaman said.
City officials plan to continue budget discussions along the following timeline before potential budget adoption in August:
- Aug. 5: Public hearing on budget and first budget workshop
- Aug. 12: Potential second budget workshop
- Aug. 19: Ordinance adopting the FY 2024-25 budget, public hearing on tax rate and possible ordinance adopting tax rate
