Staff seeks $3.4 million in new taxes; $34.5 million budget includes 3% pay raises for city employees
The skinny budget chickens are coming home to roost with a vengeance — and a big appetite — in Peachtree City.
After 10 years of depending on now-defunct sales tax receipts to pay for routine city maintenance, the City Council is facing a budget blowout for the upcoming Fiscal Year 2015.
City staff at a budget workshop meeting of the City Council Monday night gave the council a choice ranging from a no-tax-increase budget that is still nearly 6 percent higher than this year’s budget to a nearly unprecedented 17 percent blow-up with a stiff tax hike of nearly 2 mills, or about $200 extra a year for the average home in Peachtree City. Part of that would pay for a 3 percent salary raise for city employees.
For comparison, the current FY 2014 budget increased less than 2 percent over the FY ’13 budget, according to the official budget document on the city’s website.
Peachtree City staff advocated for an additional $2.35 million in funding for street resurfacing alone.
That move alone would cost about $135 a year for the owner of an average-priced $246,000 home in the city.
Council was also presented with cheaper options that would lower the street repair funding, but still be a property tax increase between either $20 a year or $106 a year for that same “average” value home.
For comparison, the city in this year’s budget set aside just $768,000 for street maintenance.
The stark difference in amounts is largely attributed to a budgeting decision made by council in 2004 when it decided to shift the cost of road and cart path maintenance from the general fund budget to revenue from the countywide transportation sales tax, which kicked in $2 million a year.
For 10 years, subsequent councils left the property tax rates the same but didn’t use the additional SPLOST funds to “get ahead” of more than traditional annual road and cart path maintenance.
Finance Director Paul Salvatore noted that much of that budget windfall was used to respond to citizen requests to increase police and fire personnel.
The sales tax money has dried up, and the city has to find an answer for funding or deal with what Councilman Eric Imker summed up as “a crappy level of service.”
Staff also proposed a modest $75,000 increase in cart path resurfacing to bring the funding up from $365,000 this year to $440,000 in the 2014-15 budget. That would cost just over $4.25 a year for the average-priced home.
That figure would not accomplish path extensions that have been identified as beneficial to the city — but Councilman Mike King noted that since the cart paths are the city’s signature element, they need special attention.
Imker said like city residents, he also drives around on bumpy paths in his golf cart.
As an implicit admission that the city’s much-vaunted outsourcing of landscaping has failed to produce acceptable results, staff also proposed a .222 mill increase, equal to $22 a year on the average home, to ditch the city’s not-quite-successful landscaping outsourcing service and hire nearly the same number of people it laid off several years ago.
The additional funding of $382,000 would bring the city’s landscaping spending to $961,000 — which would be used to hire 16 full-time personnel who would be responsible for right of way, subdivision maintenance and other landscaping in the growing months, and general maintenance in the offseason, according to Community Services Director Jon Rorie.
Another increase suggested by staff is a 3 percent salary increase for employees, some $405,000 as a placeholder for the pending results of a salary study the city funded this year. Salvatore noted that the budget otherwise does not include any cost of living or merit increases for city staff.
Also proposed is a $200,000 tax hike for bridge and infrastructure maintenance.
All proposed tax increases combined would produce a total of $3.4 million in new revenue.
Imker got in some shots at citizens near the end of the meeting, chiding voters for shooting down a countywide sales tax last year that would have given the city new sales tax money which could have been used for road and cart path maintenance.
Councilman Mike King provided Imker with a reality check, noting that council can’t go back in time and change the results of that vote.
“We have something we have got to deal with,” King said. “It may not make some people happy, it may make some of our staff very sad.”
King said while he hoped not, council may have to consider a property tax increase, and they may have to make cuts to the budget as well.
“If we have to cut some areas, hopefully they won’t be deep, but we’re going to do the right thing. That’s what needs to go out to the people of Peachtree City,” King said.
Councilman Terry Ernst noted that if the city increases taxes, citizens will need to see the results.
Council decided to meet again Tuesday night, following The Citizen’s print deadline, to ask questions of staff and perhaps make some strategic decisions moving forward.
Without the recommendations from staff, the city’s budget stands at $31.27 million, but Salvatore said the tax digest this year will likely be flat with no windfall from increased property values as some might have anticipated.
The city is expected to spend down its reserves by $1.2 million in the current fiscal year’s budget, in large part by design to give property taxpayers a break by paying cash. Even with that decrease, the city still has $10.26 million in its reserve fund, equal to 33 percent of the city’s annual budget. By policy the city has set a goal of having 20 percent of cash reserves on hand — so the city would still be well above that figure going into the 2014-15 fiscal year.
In his presentation to council, Salvatore also itemized how city staff were able to “cover” an additional $1.3 million in costs and reduced revenue during the budget year, which if put into a budget increase of its own would have cost $75 a year for the average home.
Imker at the end of the meeting said he looked forward to getting the full copy of the budget to look for cuts, but Pennington and Salvatore warned him that he wouldn’t find much.
Imker said he would recommend cutting “nice to have” items in the budget.
The current FY 2014 budget — which ends Sept. 30 — is $29.58 million. One mill brings in about $1.725 million in city property tax revenue. The proposed no-tax increase FY 2015 budget is $31.27 million, which includes dipping into the city’s reserve fund.
