City of Lincoln
2006 Media Releases
Mayor Coleen J. Seng today released the fiscal year 2006-07 City Budget that cuts more than $8 million in spending requests and limits spending to less than a one percent change in actual dollars spent from the current year.
Seng said the City will be on a “low calorie diet for the coming year” and stressed there are no new spending programs or new employees in the budget. “This no-frills budget meets the minimum daily needs but won’t satisfy anyone’s appetite for full services,” Seng said.
The City tax-supported operating budget would change less than one percent in dollars spent. Even when the cost of the additional pay period incurred this year is excluded, the cost of next year’s City budget will increase only 2.2 percent, which is less than the rate of inflation and less than the increase in the Consumer Price Index. The proposed fiscal year 2006-07 General Fund operating budget will be $131,654,357. The current year fiscal year 2005-06 budget is $131,564,552.
“The City has become reliant on sales tax revenue, and we have lowered the property tax regularly over the last decade. The result is that property tax revenue does not now even cover the annual cost of police, fire and 911 in Lincoln,” Seng said. “So when sales tax revenue drops, spending cuts are mandatory because sales tax revenue is the largest source of revenue for the City of Lincoln.” Seng complimented City department directors for their fiscal management, but said, “even after cutting spending, the last resort was to rely more on property tax to help cover the cost of public safety services.”
Sales tax revenue funds about 42 percent of the City General Fund budget. Property tax funds only 28 percent of the City budget. The drop in sales tax revenue is attributed to a combination of increasing Internet sales that do not pay sales tax, more discretionary income going to pay for the higher cost of gasoline, and changes in State law that have exempted remodeling and large business equipment sales. The State law changes have reduced local sales tax revenue by an estimated $1 million annually. In addition, federal budget cuts in the Community Development Block Grant program have reduced City funding and unfunded federal mandates continue to increase City costs.
The City faces nearly $1 million in higher fuel costs to pay for the 1.2 million miles driven by the police, public works and other City vehicles during the year. “Higher fuel costs have hit the City budget just as hard as they hurt family budgets. City vehicles are under guidelines to not let vehicles idle, avoid quick starts and follow other fuel saving practices that have improved mileage, but we can’t control the cost of fuel,” Seng said.
The City made changes to its health insurance by converting to a self-insured plan and increasing deductibles and prescription co-pays. That lowered the increase to 5 percent, which saved about $795,000 in tax funds and nearly $1.27 million across all funds.
Seng cut $640,000 in personnel costs and is directing City Departments to examine ways to reorganize to reduce costs. The cut will require Departments to review every vacancy and determine if it needs to be filled or can be downgraded. In addition, Seng said she will ask the City Council to consider approving retirement incentives to further reduce personnel expenses.
More than $824,000 in requested funding was cut from the Antelope Valley Project. Funding for the project was limited only to what is necessary to keep pace with the U.S. Army Corps of Engineers construction of the flood control channel.
The budget proposes eliminating the equivalent of eight positions, saving about $163,000 in tax funds. No uniformed police, fire or 911 personnel would be reduced, although a vacant deputy police chief position will remain vacant for next year. Travel and training budgets were reduced by $257,288. The Public Works and Utilities Department overtime and supplies budget was cut by $67,140 and Police Department overtime was trimmed by $75,338.
Sidewalk repair funds are limited to $175,000, and minor storm drainage repairs will rely on carry-over funds. Overall park maintenance will be reduced. Aging division support services will be reduced by $26,000.
The Mayor’s budget proposes to increase the City’s commitment to economic development by earmarking $250,000 in land acquisition funds for Lincoln Partnership for Economic Development (LPED) related job creation projects. “This additional economic incentive for job creation could go toward the purchase of right of way for the sewer, water or roads needed to make a project feasible and to make new jobs happen,” Seng said. It could also be used to acquire land for an industrial park if needed to help attract a major employer creating jobs. “Earmarking these funds is one more way the City can meet its obligation to infrastructure, which is the key to private sector job creation,” she added.
Seng said she ensured that the Police and Fire Pension Fund normal cost would be fully funded for the first time in many years. Popular family-oriented services such as pool and library hours are preserved in the budget.
The majority of the City Council had earlier expressed support for investing the estimated 10.7 percent of the property tax attributed to the recent reassessment in preserving core City services. If the majority of Council members changes their intention, up to $3 million more would need to be cut from City services.
“We started this budget process facing a funding gap of more than $6.8 million. After a lot of cutting this proposed balanced budget protects taxpayers, funds essential public safety services and continues to move the community forward,” Seng concluded.