Budget balanced without property tax rate increase
Following months of actions to control spending and negotiations with City unions, Mayor Don Wesely today presented to the City Council a balanced budget for fiscal year 2002-2003, which does not raise the property tax rate. Spending is limited to a 2.2 percent increase in the $113 million tax-funded budget. Mayor Wesely closed the projected $5.5 million budget gap through wage concessions from two City unions and some changes in services. Overall, 35 positions were eliminated, but by managing the vacant positions generated by a hiring freeze, only about ten employees may lose a job.
"We have worked hard to adjust spending during the current fiscal year as sales tax revenues fell below projections, and that has certainly lessened the cuts needed for next year," said Mayor Wesely. "Our negotiations with the unions were also key because personnel costs account for 71 percent of our tax-funded budget."
City personnel costs were expected to increase 6.6 percent, and current City services were projected to increase about 6.2 percent in the next fiscal year, which begins September 1. Revenues were estimated to increase less than 2 percent. Sales tax revenue accounts for about 42 percent of the City revenue, and property taxes provide about 28 percent of the funds for the City tax-supported budget. The slower economy resulted in sales tax revenue growing at less than 2 percent in the current year. The City’s five-year forecast had projected a sales tax growth rate of 4.5 percent.
As revenues began to decline this year, Mayor Wesely imposed a freeze on the use of unspent funds, postponed many Capital Improvement Projects in the general fund, delayed some equipment purchases, denied discretionary travel by employees, and implemented a hiring freeze with a review process to fill only essential positions. In December 2001, the Mayor initiated discussions with the five City unions to reduce the projected employee pay raises from an average of 8 percent for employees not at the top of the pay scale to 4 percent. The Mayor proposed a freeze on merit increases for one year or asked the unions to propose an alternative plan which would result in comparable savings.
The Firefighters Association agreed to concessions of about $414,000, and the National Association of Government Employees agreed to more than $818,000 in compensation savings. In addition, City management will receive smaller pay increases creating a savings of more than $282,000. The total personnel savings from the three groups is about $1.5 million, about $1 million of which helped to close the gap in the tax-funded budget. City Department Directors will receive pay increases of 2 percent and will not receive a comparability increase. The Mayor’s salary will not change for next year. The Lincoln Police Union, Lincoln City Employees Association and Amalgamated Transportation Union each declined compensation concessions.
The Mayor’s plan eliminates 49 current full-time equivalent (FTE) positions, adds eight new positions and changes six positions from partially funded last year to fully funded this year for new facilities and programs. The overall staffing reduction of about 35 positions saves $1.1 million in the tax-funded budget.
The eliminated positions include five Police Officers serving as elementary
school resource officers and two Police Officers doing community outreach and
public education activities.
"Our priority was to keep Officers on the street, and we will have just as many fighting crime as we do today," said Police Chief Tom Casady. "As turnover occurs in those assigned to street patrol, the school resource officers will return to street duty."
"My previous two budgets have increased the number of Police Officers, and I would prefer to continue to add to the Police Department," said Wesely. "Chief Casady assures me that the elimination of the elementary school resource officers will not affect the City’s safety or the core services to fight crime. When it is again feasible, I will continue adding Police Officers."
The budget increases the City’s contribution the Police and Fire Pension Fund by $250,000. The City is required to increase its contributions to the fund because annual contributions during the 1990s did not keep pace with the recommended level. The total City contribution to the fund is $1.6 million this year.
The Mayor proposes $935,000 in service changes, including:
The Mayor also proposes that taxpayers vote on three general obligation bond issues over the next year:
Of the total property taxes paid, more than 63 percent goes directly to the Lincoln Public Schools, and less than 16 percent goes to the City. The City of Lincoln property tax rate is 31.4 cents per $100 dollars of assessed valuation, which is about 25 percent lower than the rate charged property owners in Omaha.