Gardner City Council members approved a budget that maintains the current tax, or mill levy, rate at an Aug. 5 meeting. Residents will, however, see an increase in sewer and water rates.
The $49.4 million 2014 budget sets next year’s mill levy rate at 31.14, which will cost the owner of a $150,000 Gardner home approximately $537 in city property taxes next year. The utility rate increases will cost the average family $8.59 more per month, or $103 annually, than they paid last year.
City staff initially proposed 12 percent increases in water and sewer rates, but used an accounting change that will transfer $219,000 from the city’s electric utility in order to lower the proposed increases from 12 percent to 8 percent for water and 11 percent for sewer.
The electric utility, run by an appointed board, billed the city for electric usage in a way that city finance director Laura Gourley called “not the most advantageous” for more than four years. The $219,000 would essentially repay the city for overcharges.
Council member Steve Shute said he was concerned about the way the issue was handled – without notifying Gardner’s Electric Utility Board (EUB).
“I think the way this was handled was very poor,” Shute said.
The EUB had adopted its 2014 budget by the time council members began discussing an electric rebate, but council members argued that the EUB maintains a balance in reserves of 21 percent of its operating expenses. According to best practices, an electric utility should hold a minimum of 11.5 percent of its expenses in reserves for emergencies.
Shute said he would like to see further discussion about the roles of the governing body as they relate to the EUB, as well as a study to determine exactly how much it costs the city to do some services for the EUB, like billing.
“This was money the city was overcharged,” council member Kristina Harrison said. “It should not be part of that discussion. That’s just business.”
Council members agreed that the city should be refunded for the rate discrepancy for the last two years. However, council member Fotovich was alone in requesting that the city seek refunds for every year of overcharges.
“At the end of the day, we’re all playing for the same team,” council member Heath Freeman said.
The budget the council adopted includes the addition of 10 new city staff positions and spends $1.5 million more than it receives in revenues. Gourley explained the difference would be made up by city reserves.
Currently, the city holds 51 percent of its operating expenses in reserves, or savings. According to best practices, a municipality should hold no less than 16.6 percent of its annual operating expenses in reserves. At the end of 2014, budget expenditures will drop Gardner’s reserves 38 percent.
“We could reduce taxes with that money,” Fotovich said. “Why did we choose to spend the money instead of lowering taxes?”
Harrison said previous budgets projected that the city would need to raise taxes in the next few years.
“Which we’re not going to have to do,” Harrison said.
Fotovich said the city’s reserves show that Gardner citizens were overcharged.
“The reserves are there because we overtaxed the people into this town,” Fotovich said.
Shute said he campaigned very strongly on getting the mill levy down, but he supported the budget.
“We will not have the flexibility (to lower taxes) until we diversify the tax base,” Shute said.
Mayor Chris Morrow, who said during his campaign that recent tax increases were unnecessary, said he wants to make sure every planning piece is in place before considering tax decreases.
Morrow said he never promised to lower taxes. I said I wouldn’t raise taxes, Morrow said after the meeting.
Fotovich was the only council member to vote against the budget.
In other business, city council members:
• adopted a salary ordinance increasing the pay range for city employees.
• approved an $85,000 consulting contract with Houseal Lavigne Associates to complete a comprehensive plan update.
Gardner council adopts 2014 budget