After a marathon, six-hour-plus meeting, Gardner City Council members reached a consensus to examine a 2015 budget with a tax rate lower than the 2014 tax rate. Council members did not approve a budget at the Aug. 4 meeting. Instead, after a lengthy discussion in which members reached a consensus to drop approximately $235,000 in proposed projects from next year’s budget, they decided to have another work session to see hammer out details of how a less than 2 mill decrease will impact the city.
City council members increased the mill levy by almost 30 percent in 2010. Finance director Laura Gourley said the increase was necessary, in part, because there were a number of property owners who were in arrears on their property taxes. For example, one owner of Gardner property, located near Celebration Park, owes more than $200,000 annually in property taxes. Another owner of property, located near Austin’s Bar and Grill, owes approximately $800,000.
Gourley said the process for collecting back property taxes takes at least three years, and typically longer.
To date, the city hasn’t had to make up for the back taxes using reserve funds, but that could change, Gourley said.
“It hasn’t been permanently resolved,” she said. “…I’m already moving heaven and earth. We haven’t had to cover it, but I do not think you will get out of it in the next two years.”
Steve Shute, council member, first suggested dropping the tax rate by 2 mills during a meeting two weeks ago. He said the city budgeted expenditures of $11.3 million in 2013, but one year later, staff has proposed increasing annual expenses to $12.8 million.
“In the intervening year of budget preparation between last year and this year, we have increased expenditures by over $1.5 million,” Shute said. “I don’t think we have a revenue problem. In fact, our revenues are better than we originally expected. I think we have an expense problem.”
Council members went line-by-line through proposed 2015 expenditures, cutting approximately $235,000 out of the budget. The cuts include $50,000 to study how to best use a city building located on the southeast corner of Elm and Shawnee Streets, $50,000 to examine future infrastructure needs at the Interstate 35 interchange near 175th Street, and $35,000 for consultants to assist in the development of a strategic plan to incent businesses to locate in Gardner.
Gourley warned that the cuts were all to one-time projects, and said it would require further cuts in future years.
She also warned that reducing the mill rate while the city continues to have a street maintenance and capital improvements list that are not fully funded may look bad to bond investors.
“I will tell you that I have had many discussions with your financial advisor who has said it is going to be a tricky message to your rating agency that you reduced 2 mills when you have yet to continue your street maintenance program,” Gourley said.
Mayor Chris Morrow and council member Heath Freeman argued that the discussion to lower taxes should have occurred several weeks ago, when council began nailing down priorities for the 2015 budget.
Council member Larry Fotovich reminded council members that when they were setting priorities, he was the sole member who supported lowering taxes as a top consideration.
“That was the priority that I tried to get you all to back, back then,” he said. “That’s not to say we don’t change the priorities now.”
He said a lower mill rate would “put points on the board” for the community.
“You don’t need marketing and rebranding. All you have to say is taxes went down,” he said.
He called potential tax cuts a cost of living adjustment for residents.
Members reached a consensus on several items in the proposed budget, including funding for two, new police SUVs; maintenance projects at the Gardner Aquatic Center, and for consultant services to update some city codes and regulations in line with the city’s comprehensive plan update.
Although the council reached a decision to attempt to lower the mill levy by about 1.75 mills, or between $10 and $15 for the owner of the average valued home, council members did not approve a final budget.
Council members supporting the possibility of a lowered mill levy included Tory Roberts, Fotovich and Shute.
Council vice president Kristina Harrison said she wasn’t opposed to spending the additional money, but she expressed concerns about some of the priorities set in the original budget that staff proposed.
For example, Harrison opposed several of the proposed projects that would require hiring consultants.
“I am not personally a proponent of paying a consultant to tell us something we already know,” she said. “The incentive strategy, the facility needs study, we know that stuff. We know something has to be done. I would rather spend that money doing something than paying someone to tell me what we already know.”
Council member Heath Freeman and Mayor Chris Morrow were least inclined to lower the mill levy. Freeman wondered why council members were changing their priorities at such a late date, and he voiced concerns that lowering the mill levy rate this year may require a mill rate increase next year.
The council will have a work session to nail down final details of the budget, and hopefully meet statutory requirements for publication notice and approval. State law requires the city pass a budget and send it to the county no later than Aug. 25.