By CHRISTIN COYNE
The Willow Park City Council is expected to vote tonight to adopt a proposed budget and tax rate for the upcoming fiscal year.
City staff proposed the city’s total tax rate remain the same - 47.05 cents per $100 valuation - and higher than the effective rate of 46.97 cents per $100 valuation, the rate that would impose the same taxes as the current year if properties taxed both years are compared.
About 15.52 cents of that tax rate would cover debt obligations while about 31.53 cents would cover maintenance and operations for the city.
The average home value has decreased the past couple of years, staff told the council.
Not all council members have voiced support for keeping the total tax rate the same.
Council member Gene Martin, who went over a history of the city’s tax rates at a recent budget meeting, suggested dropping the tax rate by four cents in the upcoming fiscal year and another four cents the year following, for an 8 cent total drop over two years.
“At some point we will have major capital improvement needs, particularly in the water system. Some in the roads. And that should probably be funded by I&S (debt service) bonds,” Martin said. “And I think we should go to the public and ask for their approval to issue bonds for major development within the city. And I believe it will be much easier to get that approval if we show fiscal management of what we’re doing with the tax money and try to roll back fairly large increases that occurred in recent history.”
Martin pointed to recent increases the portion of the tax rate that funds maintenance and operations.
“The justification is we, the council, raised the M&O tax by 2 cents a couple years ago because the property values had dropped because of the general economic malaise that everybody is suffering from and we needed to raise the rate to keep our revenue stream the same as the year before,” Martin said.
In 2011, Martin said he voted against the adopted tax rate because the city council allowed the M&O tax rate to go up simply because the I&S rate had gone down, taking advantage of debt service levels.
“That is a general feature, I think, of how property owners are stuck with more and more tab without actually being notified,” Martin said.
“In 2012, we raised it 3.6 cents because the I&S rate went down 3.6 cents,” Martin said.
However, some other council members questioned what a tax decrease would cost the city.
“What department do you want to cut?” Podany asked Martin.
“Nobody’s talking about cutting a department,” Martin said. “That’s silly.”
Money could come from other areas, Martin said, referencing a suggestion by council member Brian Thornburg that the contingency fund in each department’s budget, totaling $70,000 across the board, be cut to save a total of two cents in the tax rate.
There’s a lot of money in the reserve that has not been allocated, Martin said.
“We really need to take a serious look at how we’re funding things,” Martin said.
“And you want to take all that money out of the reserves?” council member Dan Stalling asked.
If the city took 4 cents out of the maintenance and operations tax rate, it wouldn’t put a large dent on reserves, Martin said, adding that it would be about $140,000.
Other money could be found by tightening belts, according to Martin.
Podany expressed concern about the effect tightening belts would have on projects and the growth of the city.
“I’m trying to figure out where you would cut back,” Podany said.
Martin said the contingency fund in a road project is not analagous to the contingency fund built into the departmental budgets with the intention of tracking overages and underages.
However, Mayor Richard Neverdousky said they cannot plan for inflation and something has to be built in so the city doesn’t overrun the budget.
The reserves also have an impact on the bond rating when the city seeks bonds for projects, Neverdousky said.