Aldermen shy from millage increase idea
Posted on Wednesday, October 31, 2007
The Fayetteville City Council committed to a closer look at the 2008 proposed budget after choosing not to raise property tax to offset the anticipated $ 2. 3 million budget shortfall.
Aldermen voted 8-2 on Tuesday in support of an amended millage levy ordinance, which will maintain the 2007 level at 1. 3 mills for general operations, 1 mill for the Fayetteville Public Library, 0. 4 mills for fire pensions and 0. 4 mills for police pensions.
That vote will lead Finance Director Paul Becker and his staff to looking at ways to revise the proposed budget, which will include the previously discussed options and deeper cuts.
Becker said the recommendations will be presented to the council at another meeting, which will be scheduled sometime in November.
The increase would have brought in just less than $ 1 million, which would have been combined with a shift in the division of the 1-cent general sales tax between operational and capital expenses. Shifting that toward a 60 / 40 split from a 50 / 50 split would generate about $ 1. 5 million, Becker estimates.
Becker is projecting a 2-percent increase in sales tax revenue for 2008, which after this year’s decline will be about the same as it was in 2006. He anticipates the city will end the year with a $ 7. 8 million reserve fund, which will leave $ 2. 5 million more than what the council has decided should be kept for emergencies.
The proposed budget does not include a cost-ofliving adjustment, which had been recommended by salary consultants and added $ 960, 000 to the budget. The proposed budget has $ 436, 584 included for the remainder of salary adjustments that were carried over from this year, as well as set and merit increases due next year, which could see adjustments.
A hiring freeze has also been discussed as a way of saving money, though Becker said the most a freeze would save would probably be about $ 1. 2 million. He said that number assumes positions will be vacant in January.
Becker said that because the budget already expects a turnover rate of 2 percent, the city would have to have vacancies longer than 90 days before there would be any savings. If enough positions were not filled for 12 months, the city may save $ 1. 2 million, he said, though that is not a long-term solution.
Budgeting on a hiring freeze isn’t something Becker thinks is a good idea, but having to cut another 3 percent out of the various divisions’ budgets will prove a challenge. Division leaders addressed aldermen last week, saying that those cuts would mean having to fire people and / or cut services.
The ramifications of those cuts are why Ward 1 Aldermen Brenda Thiel and Adella Gray voted against the lower millage rate. The two supported the 0. 9-mill increase recommended by Mayor Dan Coody, who warned that the needed cuts will be much worse than such a modest increase.
Coody said that not passing the sales tax increase is going to be much more painful than asking voters to pay another “ $ 2 a month. ”
“ There will be a more draconian fix in two years than a gradual increase now, ” he said.
“ It’s paradoxical, ” Coody said, adding that the city is trying to lead the way in sustainability but refuses to take the steps needed to have a sustainable budget.
Ward 3 Alderman Robert Rhoads voted for the lower levy but had also offered his support for the increase, arguing that there is an equal number of residents who would be willing to pay more for the quality of life they experience in Fayetteville.
Ward 2 Alderman Nancy Allen said the council and administration need to work to restore the trust of residents over the next year, only passing a property tax increase if still needed at the end of 2008. Rhoads disagrees.
Rhoads said he is as disappointed as anyone about the state of the sewer project — which is more than $ 60 million over budget and three years behind schedule — but “ I don’t think this organization is wasting money hand over fist. ”
Alderman Bobby Ferrell made an amendment to the ordinance removing the proposed increase, arguing that the city needs to look harder at spending. He said that while the increase proposed by the administration may not be that high, it must be considered in the context that Washington County and the Fayetteville School District are also looking at increases that could be near 10 mills combined.
Ward 4 Alderman Lioneld Jordan opposed the millage increase, saying that he had hoped the hiring freeze would be enough to make up for keeping the same property tax rate. He said that as a University of Arkansas employee, he knows firsthand what a hiring freeze will do to the workload but will side with his constituents.
Ward 4 Alderman Shirley Lucas also opposed the increase, opting instead to take what she described as the more difficult path.
“ It would be so simple to vote for the millage and go home and turn off the phone, ” she said, adding that was what she was inclined to do early on.
Lucas said that while the city has come a long way during times of high sales tax growth, now is time to be conservative.
“ We may have to cut back some on our generosity, ” she said.
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