The proposed budget projects expenditures totaling $41,213,950 compared to $42,912,140 budgeted for the current fiscal year, a decrease of $1,698,190 or 4 percent. The budget is composed of the utility fund and the solid waste fund, both of which are projected to decrease, and the general fund which is the only part of the budget where expenditures are projected to increase.
In the utility fund, the largest part of the budget, expenditures are projected to decrease from this year’s $36,675,260 to $34,771,100, a decrease of $1,904,160 or 5 percent. Expenditures in the solid waste mangement fund are projected to fall from $827,420 to $791,780, a decrease of $35,640 or 4 percent. General fund expenditures are projected to increase from $5,204,460 to $5,461,070, an increase of $256,610 or 5 percent.
Despite the projected decrease in expenditures, the city may have to increase taxes for the first time since 1999 because projected revenues do not match proposed expenditures. Revenues for fiscal 2011-2012 are projected to total only $37,828,670 leaving a projected deficit of $3,385,280.
Covering that deficit may require an increase in property taxes and other city revenue sources as well as the use of prior year funds.
Finance Director Walker Gallman said state law limits increases in municipal operating millage to the prior year’s millage plus population growth during that year and the total increase in the Consumer Price Index (CPI). Gallman said the city lost population over the past decade and the CPI grew by only 1.6 percent in 2010. He said this means the city could only increase its operating millage by 1.18 mills from 74.3 mills to 75.4 mills.
One mill generates $13,400 in revenue and Gallman said a 1.18 mill increase would generate $15,810 in additional revenue.
The city will also have to come up with funds to cover a $58,820 deficit the city ran in 2009-2010.
Gallman said the city has the authority under state law to levy millage in the 2011-2012 budget to cover the deficit the city ran last year. He said 4.38 mills would be required to generate the revenue needed to cover the deficit. Council could opt to raise the entire amount in a single year or spread it out over more than one year. The millage would be a separate item on the property owner’s tax notice and would be removed once the deficit is covered.
Council is also considering increasing the garbage collection fee from $13 a month to $14. Walker said this would generate approximately $49,000 in additional revenue. He added that by doing so, the city would reduce the amount of money it transfers from the general fund to the solid waste fund by $49,000. Currently, the city transfers $130,000 a year from the general fund to the solid waste fund. If the increase is approved, this would fall to $81,000.
Council is also considering a 9 percent increase in the volume rate charged for water and sewer. The base rate would not increase but the rate persons pay based on the amount of water they use and the sewage they discharge into the sewer system would increase. Gallman said this could generate approximately $400,000.
Council is also considering funding several outside agencies with revenue generated by the Hospitality and Accommodations Tax instead of the general fund. Gallman said this would reduce general fund expenditures by approximately $67,000.
The organizations that would be funded by the tax include Uniquely Union Festival, Union County Arts Council, Boogaloo, Public Safety Day; YMCA facility maintenance; Olde English Tourism District; Union County Historical Foundation; and the Union County Tourism Commission.
Even with all this, Gallman said it is likely the city will have to dip into its prior year funds to balance the budget. He said that could total approximately $2.8 milion but said the city is pursuing several grants that could reduce some of the costs, particularly for water and sewer construction.
Mayor Harold Thompson said council is continuing to review the budget for any and all possible savings, but said a tax increases is likely.
“A lot of tough decisions are being made,” Thompson said. “We’re trying to make the cuts advantageous to our citizens and to city government.