Thursday, September 19, 2013
City OKs budget; taxes rise
By SUE WATSON
The Holly Springs mayor and board of aldermen, after a prolonged study of the financial needs of the city, approved the fiscal 2013-2014 budget Thursday, plus the budget of the Holly Springs Utility Department, and increased the tax levy.
A resolution fixing the tax levy for the city and the Holly Springs School District was approved:
• general city - 35.77 mils
• fire protection fund - 0.21 mils
• police station bond - 3.04 mils
• school district maintenance fund - 55 mils
• special school district fund - 1 mil.
• school bond fund - 12.75 mils.
• and school district note - 2.89 mils.
The tax levy for the city general fund was increased by 7.12 mils.
A sticking point in budget deliberations this year was how to pay for employee health benefits. Several aldermen and the mayor favored asking employees to pay a share of their health insurance premium, while other aldermen opposed asking employees to pay a part. The overwhelming concern was that employees have not received raises in three years and the ad valorem taxes are going up in the city, county, and the school district. And the cost of living is increasing.
Thursday of last week, the matter was settled in one hour. Employees with the city will be asked to pay 15 percent of the costs of their insurance premium. That comes to about $14.99 a week or about $59.95 a month. The measure passed with a split vote. Aldermen Mark Miller, Tim Liddy, Christy Owens and Bernita Fountain voted for the measure and alderman Sharon Gipson opposed, instead pleading for the deficit in the budget to be dealt with by cutting in other areas of the budget by line item.
Following that, Mayor Kelvin Buck asked for a motion to adopt the general city budget for 2013-2014 with no salary increases. Alderman Liddy proffered the motion with Owens seconding. The motion carried 4-1 with Gipson voting nay.
Following a detailed discussion about pay parity between the city and utility department, a vote was taken to approve the HSUD budget for fiscal year 2013-2014. Miller made the motion to approve the budget with Liddy seconding. The vote passed 3-2 with Fountain and Gipson voting against the measure.
The budget, in review, came to $7,707,832 as opposed to last year’s budget of $7,151,192. Ad valorem taxes will generate 18.35 percent of the new budget as opposed to 16.08 percent of last year’s budget.
The mil rate for the general city went up from 31.9 mils in 2012-2013 to 39.02 mils in 2013-2014 – an increase of 7.12 mils. Ad valorem taxes will collect $1,415,000 in the new budget for the general fund. Last year the ad valorem tax brought in $1,150,000, according to city clerk Belinda McDonald.
Ad valorem tax revenue will generate $4,380,896 for the Holly Springs School District.
The budget was hard fought for. It includes $400,000 in matching dollars for a street improvement grant, $150,000 in new taxes to pay off the police station bond, $35,000 for a summer youth work program, $5,000 additional money for New Hope Village, and about $415,000 for employee health insurance.
The public hearing to take citizens’ comment on the proposed budget drew questions from Barbara Caldwell and Columbus Nabors.
Caldwell asked what the city did with money that would have paid salaries of employees who were terminated during restructuring.
Mayor Buck said the money goes to the general fund.
Caldwell asked if the tax increase would have been greater if these employees had been retained.
Buck said the possibility of a tax increase is always there, but no one factor determines what the budget will be. The budget covers every aspect of government including personnel, which, he said, “is a great big chunk.”
He said the board of aldermen worked diligently to find ways to reduce expenses and to increase revenue to meet the new budget.
“We don’t have enough money to do everything now,” he said. “By no means have we been able to splurge on anything. We are still going to be short on many things we need.”
“I am not satisfied with your answer, but I will take it,” Caldwell said. “I want to thank aldermen Gipson and Fountain.”
Next up was Nabors.
He asked what is different in this year’s budget that he has not seen in the last 52 years of life?
Buck said the board decided to do some projects – like spend $400,000 on street improvement on West Woodward Avenue. Also in the budget was a fire truck needed for public safety, the new monies for recreation, the proposed summer youth work program, and renovations to city hall.
And there are some costs the board has no control over, namely cost of insurance, contributions to the Public Employees Retirement System, property insurance increases, fuel costs, vehicle costs.
“It is the intent of this board to try to meet both capital and operating needs in this budget,” he said. “We have a balanced budget that attempts to meet all those needs.”
Nabors asked what the public can look forward to as compared to the previous administration.
Buck reviewed the issues the city faces:
• many streets have not been paved in years.
• insurance costs continue to rise.
• the city has to pay down its debts.
• the Brownfields grants totaling $400,000 are revenue neutral.
• the city has to pay off a $100,000 loan to cover litigation costs incurred by the previous administration.
• there are no big changes, but the goal is to balance the budget moving forward.
Nabors asked if the administration feels it has the community’s backing on raising taxes.
“I think the people of the city are aware of this,” said Buck. “We have shared our concerns and our budget concerns and challenges and taken a balanced approach (cost cutting and revenue raising). “
Nabors asked if a community survey was taken to see if people were willing to pay more taxes or to see employees pay part of their insurance.
“Would it be fair to survey the community on increasing the ad valorem tax?” he asked. “Would it be fair to let aldermen survey their wards?”
Buck said there has been insufficient time to do surveys, but the intentions of the board have been publicized and the residents have had an opportunity to give input.
“We suggest we have done things to make sure people understand the budget,” he said.
“We inherited a $3.5 million debt on the police station and had to add millage. We made it clear when we started out that some increases in millage would be required.”
He said aldermen Gipson and Liddy had gone over the budget item by item to find places to cut costs.
Fountain said the cost-cutting measures had come up to $144,000, but Buck disagreed. He said he did not want to cut some departments, such as the police department, so deeply.
Liddy said the dollars saved by cost-cutting would have come close to the figure needed to protect employees’ insurance. He said he and Gipson wanted to avoid employee cost-share in the insurance.
“But if we have not found enough to avoid it totally, we wanted to see if we could shave that percent share so the cost to the employee would not be so high,” said Liddy.
Gipson said the attempt to prioritize where cuts could be made in department operating expenses was an effort to protect employees’ salaries.
“I do not want the public to think we cut without taking public safety and employees into account,” she said.
Alderman Owens, who resisted asking employees to share a cost of their health insurance until the last vote, said she was concerned about employees taking a hit because they are taking hits from so many directions - increases in school millage, city and county taxes. Employees have not had raises.
Gipson asked where the money went in salary savings when a number of individuals were terminated during restructuring. She asked what the proposed salaries for new hires would be.
Buck said the savings were minimal from the termination of employees during restructuring because it cost money in severance pay.
McDonald explained that the city had to pay those employees vacation time that had built up and for their unemployment insurance out of the current budget.
Buck said that the savings by terminating employees would not be seen immediately but in the long-term. He said terminating those employees helped the budget be in the black.
“And I hope to operate in the black,” he said. “We have been over-obligated and will now be able to operate in the black.”
McDonald said liability insurance for workers and workman’s compensation insurance had both gone up in the new budget.
Buck said there has to be give and take and to accommodate the infrastructure concerns, the city took on an additional $400,000 in the budget.
Gipson added, “We looked at it, and looked at it, and prayed about it. We were blessed to receive the Woodward grant, but also worked hard to make sure employees (did not have to pay for insurance).”
Buck recommended the budget be cut no further and urged the board to adopt the budget.
Liddy asked to apply budget cuts to reduce the amount employees would have to pay in insurance to an 85:15 split. The mayor had asked originally for a 75:25 split with employees paying one-fourth of their insurance costs.
Alderman Miller worried that taking too much out of the operating budgets was not realistic in what actual operational costs will be at the end of next year's budget.
“It’s gotta work,” he said. “Are we going to be in the red next year?”
Buck said the 2012-2013 contingency fund was budgeted at $175,000 but in actuality the city has already spent $281,000 with a full month to go in the current budget.
“The key is to try not to put yourself in the red at the end of the year,” he said. “Why subject yourself? Why not have a budget that reflects reality based on trends and experience? You will be very, very glad you have something set aside for contingency.”
Fountain said if some employees could not afford insurance they may opt out.
McDonald said that would reduce the insurance premium.
“We are not doing this so people will drop insurance,” said Miller.
Owens mentioned that health insurance claims went up at HSUD by 18 percent over last year. She asked if the budget could be cut by reducing contributions to 911 dispatch.
“You have the power of the vote,” said Buck. “You decide. You could go and say, ‘forget everything the mayor said.’ But in a few days you have got to make a decision. That’s where we are.”
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