Thursday, August 22, 2013
City mulls budget options
By SUE WATSON
Mayor Kelvin Buck and the Holly Springs Board of Aldermen are deliberating what the city’s options are to get the most bang for the buck in the new fiscal year budget.
Planning sessions have not yet brought the board to the point of decisions on whether to raise taxes, cut operational costs, or to do both in an attempt to keep the city budget on balance.
Mayor Buck recapped the first meeting of the board to discuss budget issues last week – without any final resolution. There are three issues on the table, he said. The city needs more revenue, or does it need to cut the budget, or both to meet its goals? The revenue is not sufficient to cover all concerns.
He listed expenses he said were current and looming:
• a $300,000 a year payment on the new police station. The board discussed setting a special assessment to collect half of that in new revenues. The additional revenue measure would add $150,000 back to the general fund.
• fire truck needs coming to $110,000 a year. Those are the combined notes on two trucks.
• a possibility the city may be required to pay back about $3 million in bonds for road construction in the Holly Springs Commons/West Boundary Extended and J.M. Ash Drive area. The city will have to pay the $3 million put up by the state if the investments of about $50 million in the Commons fails to materialize.
• a request for four new police cars. The city could budget for two at a cost of $25,000 each.
• another fire truck commitment.
• a $1.5 million grant in which the city would have to deliver a 20 percent match. The board is waiting to see if restricted cap loan funds in the amount of $290,000 can be applied to the match, leaving the city to find $110,000 in revenue. The work would pay for improvements in sidewalks, curbs and gutters, drainage and pavement on West Woodward Avenue and possibly other streets in the city.
• a revenue savings by cutting health insurance from 100 percent paid to a shared 75:25 split. The cut could save the city about $100,000. Some aldermen voiced concern that those employees on the bottom of the pay scale would be most hurt financially if they are required to pay a portion of their insurance. Alderman Mark Miller suggested an 80:20 split. The board decided to table the insurance decision until the rest of the budget is tinkered with to see how much the city has to cut and where the cuts will come. Alderman Tim Liddy asked if Obamacare would be an option as a cost saver in the insurance area. He asked if people dropped their insurance, would the group rate go up for those who kept their coverage with the city.
“Nothing says we have to provide insurance in full,” Liddy said.
Buck said the city would be within its bounds to ask employees to pay 25 percent of their premiums.
Miller said he would rather ask employees to share the cost of insurance than to have to lay off employees.
Buck said the insurance costs for the city have risen over the last five years, rising 15 percent in 2010, 18 percent in 2011, and 0 percent in 2012.
Alderman Sharon Gipson said she would rather see the board go over the budget with a fine-toothed comb first before charging employees for insurance since many salaries are already low. She said funding two police vehicles instead of four is a better option.
“I’d rather see non-emergency things be cut before insurance takes a hit,” she said.
“Your point is well taken,” Buck said.
Employees have not had raises in two or three years, he said.
“And we are looking at another year without raises,” he said.
Buck suggested a balanced approach through cuts and raising of the millage.
“If we do not make these cuts, there is nothing much left to cut without cutting operation of the city or road work, parks, recreation or any capital improvements,” Buck said. “All we would have is a little to operate plus pay our debt service. This includes not adding another car. It is a really tough task to try to accomplish.”
The mayor expressed doubt that using a fine-tooth comb would turn up more than about $50,000 in savings.
Gipson urged the mayor to look for other ways to save money in the budget first.
Buck wanted a vote on the insurance change first. But Liddy suggested that the budget be gone over first to see if there was a way to find money.
“We can plug in the options to see how the numbers play out,” he said. “We do not have to vote now, until we do the math.”
Buck said he and the clerk have gone over and over the math.
“That’s what we are paid full time to do,” he said.
With that the board went over the budget request and expenditures by department.
Alderman Christy Owens expressed concern first that if the city does not increase revenue, there may be a cash-flow problem with no money in the till for a rainy day. The city now has only about $85,000 in rainy day monies, Buck said.
Then, looking at revenue increases, city clerk Belinda McDonald said the current millage is 31.9. It would cost 39.21 mills for a tax increase to raise the $150,000 police millage assessment. A property owner would pay $71 dollars per $100,000 valuation more if half of the police station bond was financed by a millage increase.
If the city assessed millage to finance the entire police station debt, the mill rate would go to 45 and taxpayers would pay an extra $138.60, she said.
The tax equivalency approved by TVA is nearly at its ceiling. Utility customers pay for the tax equivalency which is far beyond anything that can be taken in with sales taxes or property taxes.
The board discussed budget requests by department. After going into executive session, the board came out into open session with no motions on insurance changes.
(Update – The City of Holly Springs will hold a public hearing on a proposed ad valorem tax revenue increase on September 9. For more, see the city’s advertisement on page 11).
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