Fayetteville Budget Talks Begin

FAYETTEVILLE — City administrators anticipate more money coming in and going out next year.

Mayor Lioneld Jordan’s $37.5 million proposal for the 2014 general fund is a $1.4 million, or 3.9 percent, increase from what aldermen approved last year.

The mayor’s budget plan balances revenue and expenses, but doesn’t yet include raises for city employees. “I’m going to wait until spring of next year before I decide how much raises we’re able to afford,” Jordan told aldermen Tuesday.

The city’s general fund typically constitutes a little more than a quarter of the overall budget. It doesn’t include money set aside for capital improvement or debt payment. Enterprise money, such as the water and sewer and solid waste funds, are not included either. That money is predominantly supported by user fees.

More than 60 percent of money in the city’s general fund is expected to come from sales tax next year. More than 80 percent will be used to pay employee salaries and benefits. Money also pays for material and supplies, motorpool charges and transfers to outside agencies, such as the public library, senior center and Boys & Girls Club.

Paul Becker, finance director, forecast Tuesday sales tax proceeds would grow $923,000, or 4.1 percent, next year compared to the 2013 budget. Becker estimated franchise and building permit fees would increase $305,300, or 5.3 percent, and he predicted property tax growth of $170,000 — a 10.5 percent increase.

City administrators plan to dole out $979,000 more in salaries next year, because of 4 percent raises the City Council authorized in early 2013. The city’s share of employees’ health insurance premiums is expected to increase by $319,000, and upgraded computer software and maintenance could cost an additional $150,000. Some general fund savings in 2014 will come from new money for Ozark Regional Transit and Razorback Transit. Transfers to those agencies will be paid for next year using local turnback money from a half-cent sales tax Arkansas voters approved in November, Becker said.

One of the first steps in the city budget-setting process is determining next year’s property tax rate. Property taxes comprised less than 4.5 percent of the general fund this year.

Jordan’s administration isn’t proposing to raise property taxes in 2014.

The overall property tax rate for most Fayetteville residents is 53.75 mills, according to the Arkansas Assessment Coordination Department. At that rate, the owner of $200,000 house pays $2,150 per year.

The city’s property tax rate is 3.1 mills. That includes 1.3 mills for the general fund, 0.4 mills apiece for the firemen’s and policemen’s pension funds and 1 mill for the public library. The same owner of a $200,000 pays $124 to the city.

Don Marr, Jordan’s chief of staff, said the city share of the millage is the lowest of Northwest Arkansas’ four major cities. It’s the Fayetteville School District’s millage that puts local taxpayers on par with other cities.

Sarah Marsh, Ward 4 alderman, asked Tuesday why city administrators didn’t consider raising the millage if property taxes are low by comparison.

“I understand that people are stretched, but I’m also hearing a lot of demands from the community for a higher level of services and infrastructure,” Marsh said.

Marr said a property tax increase would be difficult after a recent hike in state sales taxes.

Becker added, “Even though nationally we see numbers that show growth and an economy getting better, I know there’s sensitivity on the mayor’s part … that many, many people are still struggling.”

Aldermen are scheduled to consider setting Fayetteville’s 2014 property tax rate at their regularly scheduled meeting next week.

Meetings on the city’s overall budget are expected to begin in November.