Mayor Chris Beutler says his proposed budget for the 2010-2011 fiscal year reflects three strategic priorities: maintain the quality of life, support the local economy as the national economy recovers and increase City sales tax revenues. The Mayor will present his budget to the City Council at 1:30 p.m. Monday, July 12 in the City Council Chambers. The tax-funded budget totals $139.7 million, a 3.6 percent increase over the current year's budget.
"The average budget increase for my first three budgets was 1.3 percent," Beutler said. "That is well below inflation, and I would wager, lower than virtually any governmental entity during the same time period. Those past cuts make it more difficult to find cuts in this year's budget."
The Mayor said the increase of $4.9 million in the tax-funded budget is necessary to maintain core services. Personnel costs make up about 70 percent of the budget, and the Mayor said the State's Commission on Industrial Relations (CIR) creates pressure for increased wages. "While the system does provide some stability and prevents strikes, it also takes away much of the control we have over salaries and benefits," he said.
In his four budgets, the Mayor has cut 130 positions (net), a 5.8 percent decrease in the City workforce and a savings of $5.7 million dollars. "Through reorganization, cooperative agreements with providers, the use of technology and other ingenious solutions from our City employee, we have been able to minimize the impacts of those cuts on the public," he said. "City Hall has done more with less, and I am proud of our increased efficiency and quality."
The City's property tax rate will remain unchanged at 28.8 cents per $100,000 in assessed valuation. The owner of an average $150,000 home can expect to pay $431.82 in annual City property tax, which is only about 14.3 percent of the total property tax bill. The City's property tax rate has decreased 44 percent since 1993 and is one of the lowest among Nebraska's 15 largest cities..
"The theory of the growth dividend is that increased revenue from growth helps provide for increased services," Beutler said. "The City levy has actually been lowered when property valuations have risen. Lincoln has used the growth dividend largely for tax relief, and the results are beginning to show in areas like infrastructure and emergency response."
Property taxes and sales taxes make up about 70 percent of City revenue. Beutler said the slow growth of sales tax receipts places increasing pressure on the property tax. "We anticipate the arena project will stimulate sales tax growth as construction begins, but we also must have new business growth and expansion of existing businesses," he said.
To balance the budget, the Mayor has reduced General Fund spending by $2 million; increased cost recovery through user fees by $500,000; and transferred about $657,000 to other funds. The Mayor also is proposing the use of about $3.8 million in one-time revenues, including a transfer of $3.5 million from the Special Assessment Fund to the Cash Reserve Fund.
"I have long cautioned that the City's structural budget deficit can not be addressed with one-time funds, and that is why we have used this solution sparingly in my past three budgets," Beutler said. "But the stakes are simply too high to let the principle override the practical. Without the infusion of considerable one-time money, the City can no longer provide core services to the community. Hard times are the reason we initiated a Cash Reserve Fun in last year's budget - to preserve programs and keep pressure off taxpayers."
Beutler said the revenue increases allow for the following programs and services to be maintained:
"My budget proposal for 2010-2011 allows us to maintain the core programs that mean so much to our community identity," Beutler said. "Maintaining our quality of life is essential if we are to take advantage of new opportunities as the national recession ends."