By Nancy Huddleston, Editor
With levy limits and rising prices for gasoline, asphalt and other materials, it might be expected that the 2009 city budget would go up – and by quite a bit.
Instead, the tax rate is expected to go down and requests by the police department for more personnel will likely be filled.
On Monday, Sept. 8 the Savage City Council is expected to officially adopt the 2009 tax rate and levy, which puts in motion how much taxpayers can expect to pay for the city portion of their property taxes. The meeting begins at 7 p.m. and is broadcast live on Government Access Channel 14 and online via webcast at www.savagepacer.com [1].
Preliminary discussions regarding the 2009 general fund revenues and expenditures, the tax rate and levy took place last week during a work session. The City Council has also met throughout August for budget work sessions to go over the Capital Improvement Plan (CIP), debt service levy, and Tax Increment Financing (TIF) districts.
In terms of the general budget, Finance Manager Shelly Kolling said she made some general assumptions regarding overall impacts. For instance, fuel is budgeted to go up 10 percent, refuse collection, 25 percent, electricity, 5 percent and natural gas, 25 percent.
What’s more, Kolling explained, there will be changes to insurance categories in the coming year. Worker’s compensation is expected to go up 8 percent, property insurance, 3 percent, liability, 5 percent, automobile, 3 percent, dental, 5.8 percent, health, .44 percent and 0 percent for life insurance.
But City Administrator Barry Stock explained that there has also been some cost savings in the budget. The human resources director position and a human resources administrative position have been eliminated for a savings of $100,000.
What’s more, the city has been putting about $120,000 towards the county’s 800 MHz system for each of the past two years. That $120,000 expense is no longer being incurred, which allows the city to use that money toward other expenses associated with increases to the general budget.
And for years, Stock has cautioned that the city needed to wean itself off building permit revenues, so it was ahead of the curve when the current housing crisis hit and has conservatively estimated those revenues.
Stock also explained the 3.9 percent levy limit put on cities by the state Legislature this session does not include costs related to police and fire operations.
Therefore, the police department’s $155,000 request for new personnel and equipment is something that falls outside of the 3.9 percent levy limits.
As it stands right now, Stock and Kolling figure the tax rate will be 46.7 percent, which is down from 48.4 percent last year. The levy will likely be about 5.6 percent, and it increased between 8 and 9 percent last year.
But there’s one more component of the budget that is unknown – the overall market value increase to property. Last year it was 3 percent, but this year the city is budgeting 0 percent.
Stock explained the city gets market value information from Scott County, but it has gone through a financial software update and the city has not been able to get its market value information.
“So, given the market conditions, we’re going at zero,” Stock said.
If the market value goes below zero, Stock cautioned, then the city will have to go back and cut some things out of the budget. “Right now, that’s the only wildcard number we have in the budget,” he said.
“We’ve put together a tight budget,” Stock told the City Council on Aug. 25. “We are acknowledging the levy limits and we also know that people at home are having a tough year, too. Costs have gone up and the last thing we want to do is have the tax rate increase.”
Once the City Council adopts the preliminary levy, it can be decreased before the final levy is adopted in December. But, according to state law, it cannot go up.
Nancy Huddleston can be reached at editor@savagepacer.com [3].