The Fayetteville City Council on July 19 adopted a $9.359 million budget that represented a small decrease compared to the current budget that ends July 31. It also signaled a tax rate “roll-up” is coming.
The council also approved an increase in sewer rates that will be offset by an equivalent decrease in sanitation rates. Seniors will benefit the most on the new rates, paying 28 cents more in sewer rates but seeing a 42-cent reduction in trash pick-up costs.
The $9.359 million budget saw more than $107,000 trimmed off the current general fund budget while public safety services, such as fire and police, account for nearly two-thirds of the budget, or $6.082 million.
The expected fund balance for Fiscal Year 2013 will be nearly $809,000 and is accompanied by another three months of operating reserves.
Revenue projections include a 13 percent decrease in the property tax digest, a 2 percent increase in local sales taxes and business taxes, a 1 percent increase in licenses and permits and a millage rate roll-up to offset the decreases in the tax digest.
Sales and property taxes are the largest revenue sources for the general fund budget, with sales taxes representing 25 percent of revenues followed by property taxes at 23 percent. Business taxes account for 17 percent of the budget followed by franchise taxes at 14 percent and fines and forfeitures at 12 percent.
On the expenditure side, the budget proposal would shrink the budget by 1.13 percent, add a 2.1 percent increase to employee salary and benefits, and also continue the hiring freeze and voluntary reduction of hours that has been in place for several years.
The employee salary increase is a one-time expenditure of under 2 percent while the increase in the cost of benefits rounds out the 2.1 percent increase. The proposed budget would see city employment numbers drop to 124 full-time equivalents for 2013, down from 163 FTEs in 2008.
The council also amended the sewer rate, increasing fees by 2.1 percent and equivalent to a 57-cent increase in the average residential sewer bill. A nearly equivalent decrease in the sanitation rate will offset the sewer rate increase.
The approval will have the minimum residential rate increasing from $15.95 to $16.28, the senior rate from $13.56 to $13.84 and the commercial rate from $27.95 to $28.54. The proposal is based on the current Consumer Price Index of 2.1 percent, Assistance Finance Director Ellen Walls said.
The sewer rate increase will be offset by a decrease in the sanitation rate. Residential trash pick-up will decrease by 50 cents while seniors will see a 42-cent decrease in the monthly rate.
Walls noted that sewer rate options were discussed during the council retreat in March to insure the city’s ability to meet the required debt service obligations as outlined in the 2010 Series Water and Sewer Revenue Bonds.
The options included a partial refinancing of existing debt, or a possible merger of water services with the county, or a sewer rate increase or combination of options. It will be another 12 months before there are any bonds eligible for refinancing and a merger with the county is not possible at present with the appraisal and other requirements pending. The last option is a sewer rate increase, which is necessary in order to maintain the required debt service coverage, Walls said.
As for the amount of the millage rate roll-up to offset a 13 percent decrease in the city’s tax digest, Finance Director Lynn Robinson said the city expects to have more definitive tax digest information in the coming weeks once it is available from the county.
