In a unanimous vote, the Henderson City Council rejected the latest version of the budget submitted by the Finance and Intergovernmental Relations (FAIR) Committee during a special meeting last night.
The budget that was rejected included a five and one-half cent tax increase per one hundred dollars of value on ad valorum property taxes.
The increase in property tax is most likely the reason that the budget was rejected. Several members of the Council campaigned on a platform that included a promise not to raise City taxes.
The revised budget was formulated after the City Council rejected a reduction in funding of joint City-County programs by 12.5% at a meeting on May 29, 2007.
After the budget was rejected, it was decided to re-visit the issue of the budget after the short meeting agenda had been concluded. Several ideas for balancing the budget without a tax increase were discussed in an ensuing Council debate dominated largely by Henderson Mayor Clem Seifert.
Seifert suggested delaying new hires. In particular, he recommended delaying the hire of a public utilities engineer. Council member Elissa Yount argued against the suggestion, pointing out that Henderson has already delayed that hiring for a year and that funds for the position do not come from ad valorum taxes.
According to Assistant Finance Director Sandra Wilkerson, about $25,000 for the position come from general funds.
Yount countered that doing without the position was a “bigger gamble” than the $25,000 that would be saved.
It was determined that delaying the hiring of the full-time City Attorney, Public Utilities Engineer, and Finance Director would save approximately $75,000 in general fund expenditures.
Council member and FAIR Committee Chair Lynn Harper suggested that each department cut the necessary amount (later determined to be approximately 2.76%) from their budgets.
Seifert responded that it should either be a cut or increased revenue.
Yount said that the City has “gotten into trouble” for budgeting revenues that did not come in.
City Manager Jerry Moss noted that the City does not have many “revenue-producing departments”.
In a discussion led by Seifert regarding the Fund Balance Policy passed on September 12, 2006, it was determined that $78,000 taken from the fund balance in the latest was in violation of the policy which calls for 10% growth of the fund balance every year until the general fund reaches 24% except in the case of emergencies.
The figure of $463,000 was reached by adding the $385,000 the tax increase would have raised to the $78,000 that would have been taken from the fund balance.
At that point, Moss advocated for City departments, stating that the Council is taking away from departments that “have already been cut too far”.
Moss stated that salary adjustments may have to be cut, an idea that was automatically contradicted by Harper.
Seifert argued with Moss, telling the City Manager that Moss is of the opinion that [the Council] is raising taxes to fund joint programs. Seifert stated the opinion that [the City] is raising taxes to pay salary increases.
Moss stated that he is of the opinion that [the City] is cutting its departments so “we” can give to County departments “that are, in fact, getting new personnel”.
For confirmation, Moss asked Brian Short, Director of Emergency Management for Vance County, if he were getting new personnel. Short confirmed that he was getting two new employees, but that only one was being paid out of City/County funds.
“This isn’t my first budget,” Seifert said. “You and Sandra [Wilkerson] have ways to find money to cut.”
Yount observed that citizens would not see an increase in service to go along with a five and one-half cent tax increase. She noted that people have said to her that they are willing to pay the increase for improvements in police protection and sewers.
Seifert countered that taxpayers don’t want to pay more taxes, but asked if they are getting any more gas for current prices than they were a year ago for lower prices. He argued that taxes in Henderson have increased at a rate lower than the inflation rate.
“I believe this is a year you don’t raise taxes,” Seifert said.
Seifert then argued that the $385,000 could be made up using the E-Civis program, a piece of grant application software recently purchased by the City.
After debating various was to increase revenues, the Council then discussed how cuts would be made. It was agreed that City Department heads would make cuts within their own budgets, supervised by the City Manager.
The Council then turned its attention on where to make the cuts. It was decided that general fund expenditures would be cut, but Council member Bernard Alston cautioned the Council against making cuts in programs where [the City] has contracts at least until a meeting with the County is held.
Alston moved to cut all expenditures in the general fund except those the City is contractually obligated to fund.
The City has contracts to fund the 911 Call Center, the Interagency Drug Enforcement Unit, the Board of Elections, and the Vance County Tax Office.
It was determined during discussion that this cut would affect the H. Leslie Perry Memorial Library, since no contract exists between the City and County to fund that institution. It was estimated that the library funding would be reduced to $292,500.
The motion passed, with Council member Mary Emma Evans opposed.
Council member Bobby Gupton then moved that the insurance premium increase that is given to seven out of nine Council members in cash not be given to members of the Council as a pay raise.
The amount comes to $5,200 per year.
Harper modified Gupton’s motion to include the Council’s travel budget. The Council has a travel budget that is separate from a travel allowance that is remitted to each member as part of his or her regular pay. This is estimated at $6,000 per year.
The motion passed without opposition.
Before adjourning, a FAIR Committee meeting was set for Friday, June 22, 2007 at 12:00 p.m. to review what will be the latest version of the budget.
A special meeting of the Henderson City Council was scheduled for Wednesday, June 27, 2007 at 5:00 p.m. for the purpose of budget ordinance adoption.