By CHRISTIN COYNE
Property owners in Willow Park will see a lower tax rate for the first time in several years after the city council voted last week to reduce the ad valorem tax rate by a penny.
With opposition voiced from Mayor Richard Neverdousky and Mayor Pro tem Amy Podany, the council voted 3–1 to adopt a total tax rate of 46.05 cents per $100 valuation for the fiscal year ending in 2014. Councilmember Dan Stalling was absent from the meeting.
The tax rate was at 47.05 cents per $100 valuation during the 2013 fiscal yearand city staff proposed leaving the rate unchanged.
The first motion made by councilmember Gene Martin – to set the tax rate at 45.05 cents per $100 valuation – received a tied vote, with Podany and councilmember Brian Thornburg opposing the motion and Martin and councilmember Bernard Suchocki voting for a two cent decrease. Neverdousky broke the tie with vote against.
After discussing the issue in several budget meetings in recent weeks, the council opted to cut contingency funds budgeted for each department. That amount totals approximately $52,000 in the general fund budget, according to City Administrator Matt Shaffstall. Though the staff argued that the contingency funds were created to help better track real expenses within departments and stay within budget, several council members expressed concern that the contingency funds were essentially fat in the budget.
With the one cent cut in ad valorem taxes expected to bring in around $30,000 less than proposed for operating expenses, the city council also voted to move the difference between the cut expenses and the revenue decrease to a line item to help support economic development and worthy community services. The council discussed using the money similar to the way the city’s hotel tax fund, which has grown smaller, has been used in recent years.
“The [fiscal year] 2013-14 budget is balanced,” the council was told in a budget memo. “Normally this wouldn’t be considered a major issue. State law requires cities to submit a balanced budget, but it’s how the city has balanced the budget the last few years that has been an area of concern.”
Amending the current fiscal year budget earlier in the year revealed structural deficits, according to Shaffstall.
“Previous budgets included overestimated revenue projections and use of fund balance reserves to balance the budget,” Shaffstall wrote. “A tremendous amount of time and energy went into ensuring that the budget is balanced using current revenues to cover operating expenses.”
In addition to making sure revenues exceed expenditures, staff said an effort was made to match sources of funding so one-time revenue sources went to one-time expenditures, such as capital improvement projects.
Property tax revenues of more than $1.5 million make up approximately half of the $3 million general fund budget projected revenue. Sales tax revenue is also projected to bring in about $680,000. Other revenue sources, such as franchise fees and development fees, make up the remaining portion of the budget.
Under the adopted budget, city employees would be eligible for a merit-based raise of up to 5 percent.
Several departments have also been restructured. The costs and time for a formerly full-time employee in utility billing will be split part-time between two departments. A work crew position was cut from the Public Works Department and schedules shifted to save the city approximately $34,000, while the Development Services Department has the hiring of a department director budgeted, with third-party plan reviews and inspection services continuing.
Under the general fund budget, the city is trying to take on $150,000 in street improvement projects but has another $150,000 in capital projects that are needed, according to information presented to the council.
The budget did not allow for major capital purchases, such as replacement of city vehicles.
Water and wastewater funds
The adopted budget also begins to separate the water, wastewater and solid waste utility service funds, which have often been treated as the same fund in prior years, according to city staff.
Staff identified the city’s wastewater fund, with a budget of $628,000, as the city’s largest financial challenge.
With a small customer base and a different billing structure than the water system, often allowing customers to have their bills capped, the wastewater fund isn’t paying for itself.
The wastewater fund also owes the water fund for years of operating transfers, a loan for the upgrades to the city lift stations and litigation expenses.
Though wastewater revenues aren’t matching the true cost of expenses, the council took a step last week toward beginning to address that issue, voting to authorize the mayor to execute a contract for a utility rate study. The council is expected to adopt a new rate structure later in the year. New rates would not become effective until January.
Similarly, the staff attempted to separate and clarify water fund accounting, which has a budget of more than $1.8 million.
“For years the water fund has paid for a blend of expenses in the Public Works Department which included general fund, wastewater fund, solid waste fund and water fund expenses,” Shaffstall wrote. “This year’s budget made a concerted effort to identify the total cost of operating a water system and distribute expenses accordingly. In several cases, personnel costs were allocated by percentage to the city’s different enterprise funds.”