BRADENTON - The city is short $1.5 million in its General Fund.
That was the message Wednesday from City Clerk Carl Callahan to the members of the City Council as he presented his budget message (in PDF format) for fiscal year 2010. And things are unlikely to be any better in 2011, Callahan warned.
In fact, with some outstanding items, the deficit could be as high as $2 million. Still, Callahan said, previous cuts of about $1.5 million have limited the shortfall caused by declines in revenue as the local, state, national and world economies have been in recession and tax revenues have fallen.
He said the city is using its money pretty efficiently, but it's not enough. "We do better with less money than a lot of areas," he said, and in some departments staffing is below levels from 2000
"I don't think anybody on this council wants to raise taxes," said Ward 1 councilman Gene Gallo, but despite his and other members' concerns about raising taxes during the current economic times, the council voted 4-1 (with Ward 3 Councilman Patrick Roff dissenting) to raise property taxes to the rollback rate of 4.6758 mills from the current 4.2843 mills. At current valuations, Callahan said in advising the increase, that could bring in $1.1 million, though with property values continuing to fall, it might not have as much effect.
The rollback rate is the rate that would bring in the same amount of dollars as the previous year. In the past, as property values went up millage rates went down, but now as property values fall, millage rates can climb. It's better to set the millage to the rollback rate, Callahan said, and have it cut during public meetings, because setting a lower rate and trying to raise it later can be terribly hard.
A homeowner with a house valued at $150,000 with $50,000 in exemptions would pay $428.43 in city taxes under the current rate, and $467.58 under the rollback rate. Even with the proposed increase to the rollback rate, Callahan said, most people would see their taxes fall anyway.
It's getting harder to cut the budget, he said, because sometimes economies turn out to cost more than expected.
"Every time you take one step forward, and we think we're getting ahead, we move two steps back because other expenditures hit us which are requirements to fund, and we find that our revenues continue to deteriorate," he said. "It makes it a real challenge."
The city's General Fund budget has fallen, Callahan said, in the past few years. In 2008, it was $38,880,000; in the current year, it was $36,077,000; and the proposed budget for 2010 is $33,213,000, and that budget has the $1.5 million hole that needs to be filled through revenue increases, grants or budget cuts.
Drop in property values
The decline in property values has hit the city hard, Callahan said. The taxable value of property in the city was $1.6 billion in 1999, and climbed steadily to $3.6 billion in 2007. This year, the taxable value is $3 billion.
"Over the last three years, we have lost $4.5 million in revenue." At the same time, costs have continued to increase, "so you're having to offset both of those."
The city expects to sustain a 9 percent drop in property tax revenue, which is on top of 2008's 8 percent decrease.
One department that has been hit hard is the Planning & Community Development area, which has had to make cuts as user fees have fallen. Even worse, the jobs inspectors are being sent out to look at are less expensive jobs like plumbing or fence work, and those generate less revenue than other work.
Pondering public safety's budget
The city was very proactive in trying to avoid high turnover in the Police Department, and while that has led to a falling crime rate it's also hurt the city financially. Raising officers' pay so they wouldn't take jobs with better-paying agencies has cut turnover, but those costs have stayed high while the city's taxable values and revenues have fallen.
The budget for police ranks the cost per capita well below the cost in similar-sized cities like Sarasota, Kissimmee and Fort Myers, Callahan said in his budget message. Still the proposed budget for the Police Department is projected at $11,935,083, down from $12,649,990 for the year ended Sept. 30, 2007.
"All vehicle capital purchases will be funded through police impact fees," he wrote in the message, but those will run out at some point, meaning officers will have to use the same cars longer.
The Fire Department also ranks high in service and low in per capital cost, Callahan said. The budget has gone from $7,544,574 for the year ended Sept. 30, 2008, to the proposed budget of $7,315,400, down $219,000.
Public safety includes the Police Department, Dispatch and the Fire Department.
More cuts to city staff?
So the city will also have to look at reducing employees and has saved some money on health benefits, the council learned Wednesday.
"That's why it gets more difficult as you move further along. The decisions get tougher because the things you expect people to take out have already long since been taken out," Callahan said. "So now, when you're looking at the biggest piece of your budget being personnel, you have to look at that, and benefits."
Right now, according to his budget message, the parameters are:
No merit or cost-of-living increases.
Longevity pay plan cut 20 percent.
Cash payout for a quarter of sick time not an option this year.
Education and professional development reduced.
Staffing levels at previous year's level, or lower where opportunities exist.
Non-critical operating expenditures eliminated.
Capital purchases for high-priority items only.
"Everything's looked at," Callahan said. "We have some personnel decisions that we'll be cutting. We'll have to look at critical operations. When push comes to shove, we'll be having to make cuts. We've got vacant positions at the (Police Department) that we're holding back. We hope not to, if we get this $550,000 grant from the feds, we're in pretty good shape."
The grant is a $1.5 million grant over three years to keep the current level of staffing in the police force.
"We've got to look at a lot of different areas," he said. "The one thing we've talked about before is, the public doesn't want you to dream of cutting public safety, but the bottom line is, how do you not impact something that is 61 percent of your budget?"
It's not easy to make the cuts, Callahan said, because the public expects city services to work right and it's hard to maintain that level of service as reductions are made.
"The last two years have been more difficult, as we continue to pare down the budget, which we do every single year, we go in and look at all the details and try to cut out things that we perceive are unnecessary concerning the times," he said. "'Unnecessary' has a changing definition. 'Unnecessary' five years ago may have been we don't need out-of-state travel to go to two conferences."
Although membership in the National League of Cities may have value, he added, when you don't have the money maybe it's not needed.
We have to have people with certifications to do their jobs, and those are necessary, but there are a lot of things that are not needed, he added.
The conservation paradox
The city's Public Works Department has been doing more with less, including a work force of 57 employees, down from 69 in 2000. "These highly labor-intensive services are only really noticed when and if the service is not provided," Callahan wrote in his budget message.
Though the city has augmented general maintenance with two Department of Corrections crews and supplemental funding from the Community Redevelopment Agencies, it has to cut more, and is planning to cut the paving contract to $195,000, compared to $400,000 in the current fiscal year.
A big issue in the city's Utilities Department has been that while the department is now self-sufficient, city residents have taken seriously the calls to conserve water, which unfortunately leads to lower bills and lower revenues. Savings have been offset by higher chemical costs and reduced consumer consumption. Still, rates are below those of neighboring municipalities, the message said.
Callahan had showed councilmembers charts showing the decline in nine out of 10 revenue sources for the city, and that had an effect on Gallo, the Ward 1 councilman.
"Nobody knows where this economy is going," he said. "I've been on this council for 17 years, and last year and this year I've never seen the problems that we're going to have in putting the budget together, and the things that we need to do. If you consider the city of Bradenton a business, as I'm sure that you do, and you look at our revenue back in 2005 compared to today, and the services that we provide to the citizens of this city, the cost has increased every year."
The revenue source today is what it was in 2005, he said, and with the costs going up you'll soon be out of business. He made a motion to approve the rollback millage rate, with the understanding that it would be rolled back.
Ward 4 Councilman Bemis Smith said he supported setting the rollback rate now and trying to decide what is best. "At this point, I'm not particularly inclined to raise the tax rate this year, or any year for that matter, and to use my colleague's analogy as a business, I do understand, and we are a little bit different from a business as much as I like to say that I like to see the city run as a business," he said. "Unfortunately, we're having to do the things that families and businesses in the community are doing when you can't raise rates."
Right now, people are lowering their rates to generate business. "That's what happens in the private sector, is you lower your cost to try to stay in business," he said. "You don't necessarily raise your prices. If we could do that we'd do it."
While it's not that big an increase on a $150,000 home, Smith said, the city needs to be aware that people are hurting.
"The general consensus I've heard is that people want to pay less taxes," he said. "I'm here to serve them. I'm not necessarily here to help drive them off the cliff. But I'm here to try to balance both the desires of the community to keep costs down and keep expenditures down, and run a city that I'll be proud of when I walk away from it."
Callahan said the process of cutting is hard since the city provides so many essential services, and there are no plans to end the four-day workweek at City Hall.
"When it comes to being able to cut, we are really hamstrung by the fact that most of our services are very essential services," he said.
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