FAYETTEVILLE — A 0.3-mill increase in property taxes, proposed during Tuesday night’s city council meeting, would generate an additional $350,000 to help balance the city’s budget in 2011.
The alderman who proposed it, Kyle Cook, said he’s trying to seek a balanced approach to dealing with the $1.45 million shortage anticipated by Mayor Lioneld Jordan’s proposed 2011 budget.
“I was going to ask for half a mill, but I don’t even think that would get any acceptance,” Cook said Wednesday. “The school millage has gone into effect and people are feeling that effect. I figured a 0.3-mill increase would at least have a shot. It’s an increase, but it’s a small increase.”
Jordan, however said Wednesday he’s uneasy with raising taxes during a recession, even as he’s open to discussion of all ideas for balancing the city’s annual spending plan.
“In a time when we’re looking at the worse recession since the depression, it’s difficult to propose a tax increase,” he said. “People have come to me and said, ‘If you have reserve, why aren’t you putting it to use now and tax us later if you have to?’”
The city’s available general fund reserve is around $1.4 million. City government has $5.7 million within the general fund that’s set aside by City Council policy as a form of emergency fund. That’s the amount that could cover city expenses for about 60 days in the event of an emergency. Jordan said the city also has a $2 million catastrophe fund.
Fayetteville property owners pay a 1.3 mill tax levy each year to the city ’s general fund, which pays for general city operations such as fire and police.
On Tuesday’scouncil agenda, a proposed ordinance would have left all city millages unchanged for 2012. The council, after hearing Cook’s proposal, made no decision and expects to take up the matter at its next meeting.
Dipping into the city’s reserve was one of the options before council members as a way to fill the budget gap. Cuts in services have also been discussed. City administrators have also told alderman it would take a 1.3-mill property tax increase to cover the expected budget gap if the council chose that path.
Though his proposal would only meet about one-third of the city’s budget needs, Cook said it’s a step in the right direction.
“It will at least help us get a little closer to where we need to be,” he said. “Instead of saying, it’s all millage, all reserves or all cuts, I want to blend the three. From what I’ve heard from people on the street, they feel the same way.”
Editor's Note
This story has been updated to correct who Alderman Kyle Cook credited for finding $600,000 in additional budget savings in 2009.
Cook went on to credit the city staff for its work in 2009 to find $600,000 in additional savings after the City Council adopted the budget. Without that, he said, a property tax increase would have been inevitable then.
Steve Clark, president of the Fayetteville Chamber of Commerce, said avoiding major cuts in city services, such as fire, police and sanitation, are his main priorities when it comes to finding ways to balance the budget.
“We’re always very sensitive to increases in any fees or taxes,” he said. “It’s a complicated issue for us, which is why we will have some discussion about it at the chamber. If they’re talking about property owners paying an extra 50 cents a month, then those are things we probably wouldn’t be that upset about.”
Ward 1 Alderman Brenda Thiel said she’s opposed to any major tax increases.
“I feel like the people could support a 0.3-millage increase in addition to what we already have because it doesn’t amount to that much,” she said. “It’s a way of diversifying our revenue stream, which we’ve talked about every year, rather than just continue to take everything from the (reserve) fund.”