Council hears requests, talks lower tax rate



The Liberty Hill City Council got its first look at the proposed budget for next fiscal year on Monday, and following a brief overview, two council members – Wendell McLeod and Liz Branigan – said they felt it was time to give taxpayers a break.

“I’ve been wanting to say this for quite some time,” McLeod said. “I want to lower the tax rate to 48 cents. I think we need to give the citizens a break and I think two cents will do it.”

Mayor Rick Hall was not opposed to the idea of a lower rate, but favored the notion of keeping those funds and making sure they go farther.

“My ultimate goal would be always to lower the tax rate,” he said. “I think 48 cents would be a good number to hit right now, but the problem is once we lower it, it’s harder to get back. So instead of maybe lowering it this year, we look for outside of the box type ways to spend the money to make sure we are utilizing 100 percent of our money the best way we can.”

To keep options open as the budget is finalized over the next three weeks, the Council voted 3-1 for a proposed rate at the rollback rate of $0.548962 per $100 property value.

McLeod opposed the motion.

“This does not set the final tax rate,” said Finance Director Michel Sorrell. “The motion is just to say we would not go higher than a rollback rate. As we discussed in the budget workshop, I’m going to be bringing back iteration to you with some of the things that you’ve requested and the different tax rates, including 48 cents.”

Holding the line on the current was the preference for City Administrator Greg Boatright.

“I’m happy with the 50 cent rate,” he said. “I think it keeps us right where we need to be. I think we’ve been very consistent about that rate over the last four years, and as far as increases on employees or anything like that, it’s a council decision, but I think the baseline budget is where I’d like to be.”

The tax on a $300,000 home at the current rate of $0.50 per $100 valuation would be $1,500. Lowering the tax rate to $0.48 would drop that

Each cent on the tax rate generates about $25,000 in revenue for the City, according to Sorrell, so a single employee could cost three to five cents on that rate alone. While all funding doesn’t come from property taxes, Boatright said he’d like to see the balance in how the city is funded shift toward property and sales taxes.

“Every year, I want us to be as conservative as we can with the increases we issue through the budget process because our small amount of property we have to tax against limits us,” Boatright said. “It is a fourth of what underwrites our budget and we need to close that gap. I wish we were at 50 percent of our (property tax) covering our operations and maintenance in our budget.”

The projected total sales tax revenue – including those for the general fund as well as those designated for the Economic Development Corporation (EDC) and street maintenance fund – is just over $1.17 million for next year.

“Our sales tax is doing well, so that’s good,” Boatright said. “With that, we’re probably around 65 to 70 percent of what our total budget is, but we make up the other roughly 30 percent through one-time fees. That’s not a good position to be in, because if the well runs dry, there are some decisions that have to be made.”

Special requests
The budget presentation was broken down into two versions, one with council and department head requests and the other a baseline budget.

While the baseline budget fit into the current tax rate of $0.50 per $100 valuation, the budget that included new requests would push the tax rate seven cents over the rollback rate at $0.61.

In the general fund, where most city expenses fall, the total with new requests is about $464,000 over the baseline budget.

Some shuffling of positions at City Hall would add the code enforcement officer approved earlier this summer by the Council, and would create a position for a permit tech separated from the current permit tech/utility billing coordinator position. The finance assistant would also become an accounting position. Those three changes would add about $186,000 to payroll and another $59,000 in training, equipment and vehicle expenses for the code enforcement position.

Expected new expenses with the swim center when it opens were projected at nearly $54,000 including lifeguards, chemicals, insurance and utilities, but would be offset by as much as $25,000 in revenue.

The Police Department, which is just over 40 percent of the general fund, submitted a request for $1.77 million for next year, compared to the baseline budget proposal of $1.36 million. The department is projected to spend just over $1.2 million in the current budget.

Although he didn’t endorse the requests made by Police Chief Maverick Campbell, Hall said educating the public on law enforcement needs is critical.

“The police department is a large portion of our budget, but it’s also not as large as the cities around us,” he said. “Most of the cities are at 51 to 54 percent of their general fund for the police department and we’re still under that. We’re closer to the 40 percent mark for our police department. That’s part of our forward thinking is what do we need to have to protect our citizens?”

A request for new radio equipment is going to be funded from the current year’s budget. Boatright said equipment upgrades are key when needed, but he feels staffing in the department is where it should be.

“My thought is, just like the equipment, when there is a specific need, I’m all for that,” Boatright said. “But I feel like last year the Council did a real good job addressing what it was (Campbell’s) needs were. I can’t justify by the activity I see, recommending additional officers for that department. Our basic footprint of our city has not changed. I feel like we have the officers we need.”

Campbell’s request was for two additional patrol officers and an operations lieutenant, a request of $416,899 total.

Two School Resource Officers (SRO) are included in both the requested and baseline budgets at a cost of $180,904.

Sorrell said she budgeted both officers because it was unclear how much the school district would be funding on the program if an agreement is reached.

The Council decided in July to send members Ron Rhea and Rundzieher to the next school board meeting, which is Monday, to discuss the SRO issue further, but it is unknown yet if the issue will be on the school board agenda.

Capital plans
Debt service is anticipated to be $462,034 in next year’s budget, if the Council issues $3 million in bonds to help cover planned projects for the coming year. In July, the Council approved a public notice for publication making it possible for the council to issue tax and water system surplus revenue certificates of obligation.

The list of possible projects mentioned includes the work on the Fowler Building and other buildings set for renovation, park improvements, the Stubblefield realignment and extension, the roundabout, drainage projects and wastewater plant expansion.

The City has issued bonds twice in the last three years, once for the Bagdad water line for $2.5 million and the $10 million for the wastewater plant.

Hall said there may be funding help available on some of the capital projects in the works, following recent discussions with representatives from the Capital Area Metropolitan Planning Organization (CAMPO).

“CAMPO will actually work with cities and provide funds for transportation and a lot of capital improvement projects,” he said. “I met with them a couple of weeks ago, me and Wendell (McLeod) and Liz Rundzieher, and they are all about wanting to help. They came back and said they have some money left over out of the fund this year that didn’t get spent that they potentially could – after they review all our transportation plans – have money available for us as soon as this year.”

Hall said he is working to get representatives from CAMPO to the next budget meeting Aug. 20.

The water and sewer funds are expected to generate more revenue – just over $2 million – than expenses – $1.8 million – and the regional wastewater fund should also create a surplus of nearly $80,000. Revenue from these funds comes from fees, not from property tax levies.

The budget for the street maintenance fund is projected at $169,875. It is funded through allocated sales tax and can only be used for street maintenance projects.

Economic Development
The EDC has yet to vote on its budget, tabling the discussion last week with the intention of taking it up at a special meeting Aug. 17 at 5 p.m. There was no reason given for the delay.

The proposed budget for the EDC is $552,895, with $335,353 coming from its allotted sales tax revenue and $214,532 from fund balance. It includes increased funding for strategic planning, from $15,000 to $50,000 and slight increases in personnel expenses due to higher salary and benefits costs for Executive Director Lance Dean.

It also includes funds that would be contributed to city capital projects, but the amounts have not been voted on by the EDC. The Council has the final approval on the EDC budget.

Moving forward
Hall wants to see city departments look ahead and begin asking for future needs to ensure the City is prepared for growth.

“A couple of them came back with wants for next year, a couple of them really didn’t. I want them to come back with wants every year. That way I know they’re forward thinking about the growth of the city and what it’s going to take in their department to maintain that growth and stay one step ahead.”

The Council will hold a pair of public hearings on the proposed tax rate at 6:30 p.m. on Monday and Aug. 27 and will adopt the budget and final tax rate on Sept. 10.
Hall said there is a lot of work to be done between now and then to match revenues and needed expenses.

“There’s what you want to fund, what you need to fund, and what you can fund,” Hall said. “I think we’re in the bind between those three right now trying to figure it out. Over the next few meetings we are hopefully going to get that all nailed down.”