Tuesday, December 15, 2009

City Faces School Tax Hike

Posted By on Tue, Dec 15, 2009 at 4:00 PM

City budget hearings generally happen in the spring.

But, facing a possible property tax hike for city schools, the City Council will begin special budget hearings Thursday, December 17th.

After being presented with four options to cover a $54 million settlement for the city schools — including a 45 cent tax increase — council members opted to look for cuts first.

"In June of last year, we had these exact same conversations. I think we made the wrong choice back in June when we gave a 3 percent raise, when we didn't cut travel budgets or eliminate vacant positions," said Council member Jim Strickland.

Mayor A C Wharton's preference was an option that would use $16 million from the city's reserves and then levy a 31-cent school tax.

Several council members advocated using a larger chunk of the city's $99 million reserve fund, but finance director Roland McElrath cautioned against doing so because it would effect the city's bond rating. Other council members wanted to try budget cuts.

"First, let's look at the budget and see where we can start cutting," said Reid Hedgepeth. "Let's look at any option ... before we give the citizens a tax increase."

"We need to consider all the options," council member Myron Lowery said. "A budget hearing on the 17th would look at reductions and, this is a major decision so I'm inclined to support it."

Administration staff are being asked to prepare a list of possible cuts, but McElrath said it would be difficult to find money in the current budget.

"Given that we're halfway through the fiscal year, we'd have to take pretty drastic action to the service levels that we're providing currently," McElrath said.

If it is going to levy a tax increase, the council needs to do it before property values are re-assessed.

"It's no secret it's a tough economic cycle," said current chief administrative officer Jack Sammons. "Real estate values will drop after January 1st according to the trustee. Your tax rate may have to be higher based on property values.

Tonight's full council meeting will be recessed until December 29th to finalize the possible tax increase.

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