City of Lincoln
2004 Media Releases
Mayor cuts budget requests, but flat revenues call for restoring
one cent of previous rate cut to maintain services
After months of review, cutting more than $2.4 million from department requests and cutting or delaying $3.3 million in capital construction projects, Mayor Seng today presented to the City Council a balanced budget for fiscal year (FY) 2004-05 that asks to restore one cent of the 2.4 cents cut from the City property tax rate adopted last summer.
In balancing the budget, Mayor Seng cut department requests for new spending. But with some revenue sources not increasing next year, the City will need to rely more on property taxes to maintain current services. Also, Lincoln Public Schools (LPS) has indicated that it will not restore the $381,000 for its share of the funding for the 15 police officers assigned exclusively to the schools. Until this current year, LPS paid $381,000 of the $781,000 cost of the School Resource Police Officers. Without a contribution from the schools, the City absorbs the $381,000 cost. The assignment of the School Resource Officers remains undetermined.
City tax-supported spending is projected to increase 4 percent, limiting the FY 2004-05 budget to a $125.8 million tax-funded budget. As a cost containment measure, Mayor Seng said the City will review each City job vacancy to determine if the job can be eliminated or filled at a later date.
"The scrutiny is necessary because personnel costs account for 71 percent of the budget," Seng said. "If there is some way to streamline duties, it should be considered. In addition, travel and discretionary spending would be frozen at current year levels." She said discretionary spending will be closely monitored.
The City is facing some costs that it cannot control. The higher cost of gasoline is estimated to increase city spending $100,000 to operate the Police, Public Works, StarTran, Fire and Parks vehicles. The costs of the watershed management program to comply with the unfunded federal mandate for new storm water requirements will be about $260,000. The cost must be absorbed by property taxes because the Legislature has not granted cities authority to charge a fee to those who have significant storm water run-off. The tax subsidy to operate the Pershing Center is increasing $100,000. It is anticipated that costs to operate the County Emergency Management Agency will be increasing following the devastating tornados and storms last month.
The City plans to spend $3.5 million of the cash reserve to help balance the budget. This complies with the official policy the City adopted last year. "Spending any more of the reserve would put the City's Triple-A bond rating at risk at a time when the City hopes to do more bonding to benefit from the lower interest rates." The Triple-A bond rating helps the City obtain lower interest rates and save money.
Mayor Seng said this proposed budget is built on a consensus reached with the City Council earlier this year to preserve current city services. The City plans to save $600,000 by restructuring the way it pays for street lights. Also, the City plans to use $500,000 of unused bond funds from previous Library and Parks projects to reduce the tax levy for debt payments. In order to balance the budget, the City Council will be asked to restore one cent of the 2.4-cent property tax rate reduction from last August.
To generate additional funds, the 911 telephone surcharge would be increased 25 cents from its current 75-cent-per-month charge. The increase will reduce the City property tax subsidy to the 911 Center by $240,000.
Last summer, the Mayor proposed and the City Council approved cutting the property tax rate from 31.4 cents to 29 cents per $100 of assessed value. The budget proposal would restore one penny to the rate.
Separately being added to the tax rate is one-half cent to pay for two bond issues voters passed in 2002 and 2003. The City property tax rate would be adjusted to 30.6 cents per $100 of assessed value for FY 2004-05, still less than the 31.4-cent City property tax rate of FY 2002-03.
The City has relied more and more on sales tax revenue as a way to reduce the property tax rate. Sales tax now provides about 42 percent of the funding to operate City government, while property tax provides about 28 percent of the operating budget. The City property tax rate has been cut 44 percent, dropping from 51 cents per $100 of assessed value in 1994 to its current 29 cents, thanks to growing sales tax revenue and not taking advantage of higher property revaluations.
"I don't like the idea of restoring any of last Augustís property tax cut," Seng said. "But only after cutting projected spending and realizing that revenues would still not cover costs, I present the option to the Council that either we restore some of the tax rate or we cut current services. I look forward to working with the City Council to complete the budget in a way that does not rely on one-time deferrals or budget gimmicks that could cause problems for many years into the future."
The budget does include a $300,000 increase for the Cityís contribution to the Police and Fire Pension Fund. The City should increase its contributions to the fund because the annual contribution has been less than recommended. The total City contribution to the fund next year would be $2.4 million.
Also proposed to be added to the Cityís tax-funded budget are a Traffic Engineer, Watershed Engineer, Parks Coordinator, Personnel Clerk, Community Learning Center Employee, Teen Center Manager, a Parks Laborer and payroll hours equal to 3 FTEs (full-time equivalents) for a variety of seasonal assignments at the Parks and Recreation Department. In addition, the proposed budget includes two new Firefighters to help relieve staffing shortages. The current number of firefighters is the same as it was in 1994.
Of the total property taxes paid by a property owner, less than 15 percent goes to the City. Other local and County government agencies makeup the other 85 percent of the property taxes paid.