City Manager David Corliss presented a recommended 2009 city budget on Thursday that bets heavily on a new sales tax to save the city's public transit system, and largely bets against a quick turnaround in the local economy.
Corliss' proposed budget recommends a slight decrease - 0.1 of 1 mill - in the city's property tax rate, but stresses the importance of two new sales taxes that Corliss said voters must consider in November.
The first sales tax would be a 0.2 percent tax to fund public transportation, while the second would be a 0.3 percent tax to provide additional funding for street and infrastructure maintenance.
If voters fail to approve the new taxes, Corliss said the future of key city services will be "bleak."
"We will be substantially behind where we need to be," Corliss said. "We won't have the revenue to provide service at the level citizens expect."
The stakes are highest for the city's public bus system. Corliss' recommended budget does not include a contingency to keep even a limited public transit system operating if voters fail to approve the transit sales tax.
The city currently spends about $1 million in property taxes for public transit service. Under Corliss' plan, all of that money in 2009 would be shifted to other areas, primarily city employee compensation and health insurance increases.
Corliss said his staff will put together data that shows how much it would cost to run a more limited public transit system if voters reject the sales tax increase. But Corliss stressed even a limited system would require either a property tax increase or a major reduction in other city services. Corliss said he would be hard-pressed to recommend a property tax increase for transit.
"If the community doesn't support transit through a new sales tax, it is fair to raise the question of how much money we should be putting into that service," Corliss said.
If voters don't approve the street maintenance sales tax - which is expected to be separate from the transit vote - street maintenance levels at best will remain at status quo levels, Corliss said.
"We would take care of the streets we could still save, and the rest wouldn't be in very good shape," Corliss said.
The tight budget times are coming as a result of the city's once rock-solid real estate market feeling the effects of a national downturn in housing prices.
The city traditionally has been able to count on a multi-million-dollar boost in property tax collections due to rising residential real estate values. For 2009, though, many properties are expected to see no increase or experience a slight decline in value. The city's assessed valuation is expected to grow only by 0.84 percent.
What's worse, Corliss said, is that he doesn't see a turnaround anytime soon. Property tax values have been growing at a slower rate for each of the past four years.
"I'm very hesitant to think the value of property overall is going to appreciate substantially," Corliss said.
He said he's also worried about the impact of rising oil prices on city operations, and is concerned about a proposal by Westar Energy to increase electric rates by 15 percent to 20 percent in 2009.
City commissioners will discuss the proposed budget at their Tuesday evening meeting, and will have a major budget study session on July 14. Commissioner must approve a budget by mid-August.
Commissioners received the recommended budget late Thursday afternoon, but it was receiving some early praise. Commissioner Rob Chestnut said he thought Corliss was on the right track with budget. He said the document definitely puts a heavy emphasis on the need for a sales tax, but recognizes the tough economic times with a slight reduction in the mill levy.
"That's recognition that we're trying very hard to manage with the resources we have, but there are issues we're asking the voters to decide," Chestnut said.
Other items in Corliss' recommended budget include:
¢ A proposal to expand the city's rental registration program, and increase the fee landlords must pay annually. Corliss is proposing that any rental unit 50 years old or older must be registered by the city and undergo a regular city code inspection. Currently, only rental properties that are in single-family neighborhoods are required to be registered. The new system would require many properties in the Oread neighborhood to be registered and inspected. Oread leaders had asked for the change.
To pay for the expansion, which is expected to add 3,000 new rental units to the registration program, Corliss is proposing the annual registration fee increase from $25 to $40.
¢ A water rate increase of 12 percent. Expanding the city's Clinton Water Treatment plant is part of the reason for the rate increase, Corliss said. Sewer rates are not expected to increase, Corliss said. Overall, he said the total amount people pay for both water and sewer should increase by about 5 percent.
¢ A 4 percent increase in trash rates, to cover rising fuel costs.
¢ Smaller pay raises for city employees than in past years. Corliss' recommended budget sets aside $880,000 for employee raises. In 2008, the city is expected to spend about $1.3 million in employee raises. Corliss also recommends the city largely eliminate cost of living increases and instead provide raises based on merit and performance evaluations.