City council members agreed to move forward with a proposal that would ask voters to approve a half-cent or larger sales tax initiative to fund street upgrades and maintenance. Council members appeared to reach a consensus during a budget policy work session on March 23.
In almost all funds, the city has more revenue than anticipated and has spent less than budgeted this year, and the city’s assessed valuations are higher by an estimated 8.5 percent. However, budget director Laura Gourley told council members next year’s budget will be lean as the gains in property assessment values will be needed to make debt payments in next year’s budget.
Gourley warned that the 2014 numbers are based on only a few months of data, and it’s too early to gather some data typically used to build the annual budget.
“Right now, I do not have one iota of sales tax information for 2014,” she said. “We’re going to be working a little bit blind, but this shows you where we’re starting from.”
Most funds appear healthy. For example, in the general fund officials have revenues 2 percent, or about $225,000, higher than projected, and officials have spent far less than anticipated — about $943,000.
A portion of those savings are committed to future projects — an IT rehab and other delayed projects worth about $278,000. The remainder of the savings is due to savings in personnel.
Things aren’t as rosy in the city’s electric utility fund. To date, electric revenues lag estimates by 1.6 percent, and expenditures are 4.3 percent higher than anticipated. In the electric utility, that translates into a $600,000 shortfall, although personnel savings of $394,000 — the city has yet to replace its former electric utility director. Gourley said the utility budget significantly underestimated the cost of wholesale electricity by about $499,000 and underestimated the cost of capital improvements by about $110,000.
“This is not OK,” Gourley said. “We got lucky this year as the savings offset it.”
Following Gourley’s presentation, council members debated the merits of potential projects for next year. A recent study showed the city has $6.6 million in pavement upgrade needs for city streets, and should be spending $615,000 annually on road maintenance. Other needs include funding a possible police station, or justice center.
“Any new facilities — if you want to do any of those, we have to have a new funding source or you can reduce the scope or phasing of those projects,” she said.
Adding a sales tax would require a ballot initiative, and council member Heath Freeman urged council to act quickly so a ballot question could be prepared by this November. In 2015, a sales tax that funded the debt for the Gardner Aquatic Center and Celebration Park expires, and Freeman said the city should work so there isn’t a lapse between that tax’s sunset and the initiation of a new sales tax.
The urgency likely excludes using the sales tax to build a justice center, city administrator Cheryl Harrison-Lee said. Ballot initiatives require an educational element, and that means much of the project must be developed prior to putting the sales tax on a ballot.
City council members seemed to reach a consensus that they would seek a sales tax initiative in November to fund street upgrades and maintenance, and next year, may discuss a second sales tax initiative to build a police station potentially as early as next spring.
Gourley said one challenge in the city’s budget is a large property that has been tax delinquent. The property, located near Celebration Park and owned by the Russell family, has a special assessment and property taxes worth approximately $250,000 per year.
“They’re not paying, and they’re probably not going to pay,” Gourley said.
The property owners are two years in arrears, but it takes at least three years statutorily before the collection process can move forward. Then it’s up to the county to collect.
“They don’t exactly work timely,” Gourley said. She estimated that even when the statutory requirement is met, it may be another two or three years before the tax delinquency is resolved.
“We have just now talked to the county and they are just now moving forward on 2008 delinquencies,” Gourley said. “So we’re looking at eight years before we get anything, if we get anything.”
Council members briefly discussed the possibility of adding a storm water fee to utility bills. At one time, several property owners complained about storm water drainage in their neighborhoods.
Council member Kristina Harrison noted that those complaints had largely ceased. She said if council were to approve storm water fees, she would prefer that be handled with special benefit districts. In special benefit districts, only those affected property owners have an assessment added to their annual property tax bills to fund projects in their neighborhoods.
Council member Steve Shute advocated for adding a storm water fee to the bills of everyone in the city. He said everyone should pay for storm water projects because they create a danger and because Gardner is so flat.
Council reaches consensus to move forward on sales tax initiative