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A slight increase in the municipal property tax millage and increases in utility rates are part of the City of Union’s proposed budget for fiscal 2012-2013.

The proposed budget totals $41,771,510, a decrease of two percent or $691,350 less than the 2011-2012 total of $42,462,860. Finance Director Walker Gallman said Friday the decrease in the total budget is due to the decrease in the Utility Fund portion of the budget which went from $35,265,840 in the current fiscal year to $34,012,670 in the proposed budget, a decrease of $1,253,170 or four percent. Gallman said the decrease in the utility fund is due to the decline in the price of natural gas which, in a summary of the proposed budget released Thursday afternoon, he described as having fallen to its lowest level in a decade.

Despite the decrease in the price of natural gas itself, the proposed budget includes a five percent increase in the base rate the city charges its customers for natural gas. Gallman said Friday that while the price of natural gas itself has fallen, the cost of providing the service has continued to increase, forcing the city to pass the increased service costs onto the consumer. Even though the base rate will increase by five percent, Gallman said the average residential customer will see their monthly bill increase 3.67 percent or approximately $1.50.

The proposed budget also includes increases in the city’s electric, water, and sewer rates. Gallman said the increase in the electric rate is due to projections that show that the wholesale cost of power will increase in fiscal 2012-2013 after declining during the current fiscal year. While the base rate will increase 5 percent, Gallman said the average residential customer will see their monthly bill increase 4.67 percent or approximately $4.74.

Gallman said the proposed 9 percent increases in the base rates for water and sewer is being driven by a combination of the cost of state and federal environmental mandates and the decrease in the city’s industrial customer base. He said this has forced the city to close two sewer treatment facilities, a move which he said is hoped will make sewer treatment more efficient in the future.

While the base rates for water and sewer will increase 9 percent each, Gallman said the average residential water customer living inside the city’s municipal limits will see their monthly bill increase by 5.3 percent or approximately 96 cents. The average residential customer who lives outside the city will see their monthly bill increase by 5.29 percent or approximately $1.44.

For sewage, Gallman said the average residential customer living within the city limits will see their monthly bill increase 4.85 percent or approximately $1.16. The average residential customer living outside the city will see their monthly bill increase 4.79 percent or approximately $1.72.

The proposed utility fund budget also includes $3,482,000 for utility infrastructure improvements and $145,000 for equipment replacement.

General Fund

The General Fund portion of the proposed budget totals $5,566,600, an increase of six percent or $326,840 over the current total of $5,239,760. The largest part of this increase is the proposed allocation of $220,000 for equipment replacement in the various municipal departments such as the Union Public Safety Department.

Gallman said the proposed budget includes $150,000 for five patrol vehicles for the public safety department. The Street Department is allocated $40,000 for a pickup truck, sand spreader, and brine tank. Also included is $7,500 for a digital recording system for the Legislative Department.

While the utility department is funded through the rates it charges, the primary source of revenue for the General Fund or municipal government operations is the property tax millage levied by the city. Under the proposed budget, the municipal property tax millage would increase from 74.3 mills to 80 mills. At the same time, however, the city will eliminate a 5.6 mill increase levied during the current fiscal year to cover a loss of revenue the city experienced in fiscal 2010-2011.

Gallman said the net effect of this exchange would be a .1 mill tax increase which will barely register on the average resident’s property tax notice. He said on a $100,000 home, the .1 mill tax increase would amount to 40 cents.

Solid Waste

One part of the proposed budget that does not include a rate increase is the Solid Waste Fund.

The proposed Solid Waste budget projects $899,370 in expenditures, a 23 percent increase or $166,890 more than the current budget of $732,390. Most of the increase is due to a proposed allocation of $163,000 for equipment replacement.

Despite the increase, Gallman said the Solid Waste Fee which the city charges residential customers for garbage collection will remain the same at $14 a month.

Cost Of Living Increase

The proposed budget also includes a 3 percent cost of living increase for city employees.

Gallman said that, counting the mayor and member of council, the city employs a total of 133 people. However, the mayor and council will not be receiving the cost of living increase. Of the city’s 126 employees, 40 are in the public safety department, 45 in the utility department, five in the Solid Waste Department, six in the street department with the remaining 20 in administrative, legislative, and planning departments and Channel 14.

The proposed increase would cost $200,000.

First reading of the proposed budget is scheduled for May 15 at 6:30 p.m. The meeting will be preceded by a public hearing at 6 p.m. State statute requires municipalities hold two readings and a public hearing on a budget ordinance before it can become law.