Henderson has a choice of raising taxes or cutting services, unless the city government can squeeze more efficiency out of its operations.
Those were the stark choices City Council members confronted at a Finance and Intergovernmental Relations Committee meeting at which City Manager Eric Williams presented his 2005-06 budget proposal Tuesday night.
Williams said his plan meets the statutory requirement to be balanced and has the virtue of avoiding layoffs among the 258 city workers. Otherwise, the city manager expressed no great enthusiasm for the budget.
“It’s all linked together,” Williams said, emphasizing that it’s a mistake to focus on one element, whether revenue or expense, without recognizing how changing that part of the budget would have a ripple effect.
It includes a 5-cent increase in the property tax rate, to 69 cents per $100 valuation, a 10 percent increase in water rates and a 15 percent boost in sewer charges. The plan would cut $1 from the monthly $25 sanitation charge, but that’s based on the elimination of curbside recycling, a proposal for which council members showed no enthusiasm two months ago.
Each cent of property tax is expected to produce $68,355. To illustrate the depths of the city’s problems, Williams estimated that when unemployment benefits are taken into account, the city would have to lay off 23 people to save enough money to avoid any tax increase.
Williams presented a chart of how his revenue proposals would affect various city residents. The property tax increase is simple enough: For every $10,000 of your home’s assessed value, your property tax would increase by $5. A $50,000 house would owe $345 to the city, an increase of $25. A $100,000 house would owe $690, an increase of $50.
The water bill is more complicated because of minimum charges. But Williams’ estimates showed the following increases in monthly charges for water and sewer: small user inside the city, $3.20, or 13.5 percent; small user outside the city, $8, or 13.5 percent; medium user inside the city, $5.34, or 13.5 percent; medium user outside the city, $13.71, or 14 percent; high user inside the city, $10.07, or 13.4 percent; high user outside the city, $25.10, or 13.4 percent; commercial user inside the city, $98.50, or 13.4 percent; commercial user outside the city, $245.96, or 13.4 percent; industrial user inside the city, $322.07, or 13.4 percent; and industrial user outside the city, $712.70, or 14 percent.
So the owner-occupant of a typical $100,000 house in Henderson could expect to pay about $114 more per year under Williams’ plan for water, sewer and property taxes.
FAIR Chairman Bernard Alston set the context for Tuesday’s discussion after Williams’ budget presentation. Alston said the council’s task, if it doesn’t want to accept the budget as proposed, is to raise taxes or cut services to offset any suggested spending increases, such as to maintain backyard garbage pickup.
Other revenues may be possible, but the property tax is the only source the council can count on as it completes the budget by June 30, Alston said.
Williams and the council discussed the perceived inequity in the distribution of Alcoholic Beverage Control Board profits. The county gets 85 percent; the city gets 15 percent. And those profits, Williams said, are calculated after the county takes some money off the top, including enough to pay for a sheriff’s deputy.
The 85-15 split goes back 70 years, when Vance was entering the post-Prohibition era. Williams said the formula doesn’t reflect the reality today: One of the two ABC stores is inside the city, and the strongest growth in ABC revenue comes from restaurants’ sales of mixed drinks, something available only inside the city.
The budget proposal includes $38,000 in ABC revenue, down $2,000, or 5 percent, from the current fiscal year. Under a 50-50 split, the city would get more like $127,000 in the fiscal year that starts July 1.
Williams said the distribution could be changed by agreement of the City Council and the Board of Commissioners, but no one Tuesday night seemed to expect the county to give up $90,000 or so. And Mike Rainey said that if the city asks for more ABC revenue, the county could ask for an equal increase in the city contribution to the 911 call center.
“There’s only one of two things we can do: Raise taxes or lower services,” Lonnie Davis said. “Those are the options we have.”
But Mary Emma Evans discussed the possibility of using the vacancies at the tops of five city departments as an opportunity to reorganize those departments to operate with fewer people and thus save money.
Elissa Yount said that idea represented the third pat of the formula Davis presented: cutting fat from the city budget.
Williams and Rainey doubted much could be saved while maintaining services, but Alston said Evans’ idea was worth exploring.
“I don’t think anybody is taking anything off the table,” Alston said. He suggested being fair and applying Evans’ idea citywide, not just in departments with existing vacancies.
That put Police Chief Glen Allen, the only department head in the room, on the spot. The $3.8 million proposed for his department, a 2.4 percent increase, includes no new positions and leaves four positions for police officers frozen. The police budget is equivalent to 56 cents on the property tax.
Evans said she didn’t see any reason to bring the police budget into the discussion. “I don’t think we need to go there.”
But Alston said it’s easier to squeeze savings out of the biggest departments because each dollar cut is a smaller percentage of the total departmental budget.
So Allen will appear before the FAIR Committee on Thursday at 7 p.m. to defend his budget. Alston wants to go through all of the departmental budgets this month, just as the council heard from all departments during preliminary discussions in April.