After last night’s City Council work session, the Council has determined the Advertised Tax Rate, which is the limit for the tax rate that can be set at the end of this budget process. The rate that was agreed upon is three cents higher than last year’s rate and meets the City Manager’s request. What does a three-cent hike mean to most families? It means a ninety-eight dollar tax increase for the average family for the entire year, or basically the cost of one dinner out for the same family. That being done, your council now has some big decisions to make for the 2016 budget.
Dominating the budget discussions thus far have been two related issues: meeting the City’s annual charges from the County for shared correctional services (our jail costs) and the revenue sharing agreement with the schools. Judging from the emails I have received, many citizens are well aware of these issues, so I will outline them quickly.
Until just last year, the costs of the jail had always been met by using the end-of-year discretionary funds. That is to say, there was no budget line for the jail costs. Last year, the former Council found that this end-of-year surplus was not enough to cover the costs, and therefore agreed to a two and a half cent increase to the 2015 budget, which almost covered the difference. Continuing to separate this cost from the General Revenue Fund or to include it, is something with which the Council must grapple.
NOW: The Revenue Sharing Agreement with the schools is defined as fifty-eight and a half percent of the General Revenue from the City. This allows the schools to plan their budget based on Projected Revenue. The City’s General Revenue excludes some revenue, specifically levies for targeted purposes; for example, sewer, fire and rescue, and in 2015 as discussed, the cost of the jail. Why is this important? If the jails were considered part of the General Revenue, 58.5% of the two and a half cents raised for the jail, would go to the schools as per the Revenue Sharing Agreement; thus leaving the jail, once again, underfunded. In order to cover the jail costs while including them in the General Revenue, there would have been a necessary tax increase of six and a half cents, to cover both the jail and the Revenue Sharing Agreement to the Schools.
Moving forward, the Council has agreed to discuss a three-cent increase to the overall budget in order to have some room to grow new and better initiatives to improve our city. I suggested an Advertised Tax Rate of six and a half cents so that we might have room to discuss whether or not to include the jail as part of the General Revenue while also honoring our agreement with the schools, or to keep them as a separate levy.
With only a three-cent increase, we are left painted into a corner; however the corner is a little brighter than it might have been. We may have improved capacity to build amenities and drive economic development. We would be able to address transportation, build a public safety building, and address the aspiration for a long-sought library in our community. Of course, we may also be growing the budget for the schools. This is never a detriment to the city. The schools are an important part of the city. Strong schools help assure a strong city.