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City Finances

City Finances

by City Administrator Michael Leamons

 

At the September 9th City Council Meeting, the Council voted to keep the same tax rate used last year, which is $0.384074/$100 valuation, the same rate in place since 2013.  Since voters approved the ½ % property tax relief sales tax in 1987, the highest property tax rate adopted was $0.4857 in 2001. Since then, the rate has declined 26%.

 

No one likes it when costs go up.  For the first 150 years of U.S. history, when our dollars were backed by gold and silver, there wasn’t much price inflation.  However, since we now operate on money backed solely by our faith in the fiscal responsibility of the U.S. government, inflation has become a fact of life.

 

Raising rates for City services isn’t done on the spur of a moment.  Mayor Miller has asked that you be brought up to speed on the process that was followed.  The City Council has been deliberating next year’s budget since May. From the outset, the Council has been considering keeping the tax rate flat and raising trash and sewer rates.  And, when the City Council adopted next year’s budget on August 26th, it committed itself to that course of action. A cover sheet on the budget which was filed on August 1st, posted on the City’s website, and e-mailed to all the Council members, clearly identified the proposed tax rate and the utility rate increases coming out of budget deliberations.  Council members were given ample opportunity to voice their opinions during the budget process . Going into the final session, it was the consensus that this was the best approach to deal with the sensitive issue at hand. 

 

During this year’s deliberations, staff recommended that the City Council add a 5% mark-up to the City’s trash collection rates to help pay for the overhead associated with handling that business.  For the average residential customer, a 5% mark-up will cause your bill to go up by 45¢/month, from $9.95 to $10.40. For the past several years, the City has been passing trash collection charges straight through.  Most cities include a mark up on the service provider’s costs to cover the city’s overhead. City staff prepares the monthly bills, processes payments, handles service complaints, and arranges for new service or discontinuation of service when needed.  The City also has to eat any unpaid bills that aren’t covered by deposits. The new 5% garbage collection surcharge will generate revenue for human resources and supplies, as well as bookkeeping and postage costs associated with administering the garbage collection service. 

 

After analyzing last year’s budget and determining that it cost more to operate the City’s wastewater system than was raised in customer charges for that service, staff recommended the gap be closed by increasing the wastewater rates by 6%.  That increase will raise a residential customer’s base sewer rate by $1.20/month from $20.00 to $21.20. (So, the total of your increase for both trash and sewer service, if you are an average homeowner, should be about $1.65/month.) In recent years, the City borrowed $3.9 million to build a much needed wastewater treatment plant and make improvements to the existing collection system.  This year’s payment on that debt will be $235,636. When the City acquired the funding, it signed a contract promising to either set the wastewater rates high enough to cover the costs of operating the system and making the annual debt payment, or raise property taxes enough to cover those costs. The City Council chose to raise wastewater rates.

 

Cities are different than private businesses in that they can pay for the cost of doing business either through service fees or through taxes.  Which method do you prefer? One might think it would all even out at the end of the day, but that’s not true. The City’s utilities have quite a few customers (taxing and non-profit entities and those with special tax exemptions) which do not pay taxes or do not pay as much in taxes as does the average property owner.  We regret that it was necessary to increase the City’s trash and sewer rates, but if the rates the City charges don’t cover all the costs of providing those services, the burden falls unevenly upon those of you who have no exemptions, but must pay property taxes. The Council chose the path to balancing the issues of growth and city services in a manner that would have the least impact on the citizens of our fair city.