Budget Woes Could Mean Tax Hike, But Not Until Next Year

“We’re not just down to bare bones. We’re in the marrow of the bone,” said Saline city manager Todd Campbell, describing the city operations at Monday’s Saline City Council budget workshop.

Saline City Council is considering a budget that will postpone expenditures, extend city debt, eliminate the deputy police chief’s position, eliminate four DPW positions, and ask workers to contribute to their retirement benefits.

At Monday’s meeting, Campbell received council’s blessing to ask city employees to contribute pay 3-to-5 percent of their retirement benefits.  The city is about to enter contract negotiations with the Teamsters union, which represents DPW and Saline Rec Center workers. Campbell will talk to police unions about opening their contract, which expires in 2013.

Still, if things don’t turn around, the city’s fund balance is projected to fall to dangerous levels by the end of the next fiscal year, said Campbell. A recent city budget report shows the fund balance falling to $700,000 by the June 30, 2013 and into $121,000 by 2014.

“My concern is that the fund balance will be diminished so much that if something major breaks, we’re going to be in real trouble,” said Campbell.

A number of revenue enhancements have been kicked around, although they have been ruled out for this year.

One option is to use the available fire millage. The city has the authority to levy the fire millage, but has been paying its share of the Saline Area Fire Department bill from the general fund. Levying the .94-mill assessment would raise about $320,000 a year.

Another option is to raise the millage rate.

Council member Jim Roth said he preferred raising taxes to borrowing.

“When we borrow to bond, we add extra interest and we kick the problem down the road. I’d rather pay the bills up front the best we can and then borrow if we have to,” Roth said.

Mayor Driskell said she was concerned about using available millage to solve the problem.

“If we use our millage up and then the personal property tax goes away, then we don’t have any options,” Driskell said.

Another option is to ask voters to approve a new recreation millage that would help support the Rec Center. The city subsidizes the center’s operations at about $150,000 annually. The city also pays for debt on the center.

The city and Saline Area Schools are also investigating ways to share Community Education and Rec Center facilities and services in a way that would save money.

Driskell said she wasn’t happy about asking employees to give more and said she hoped the city might “help them out” when the financial outlook improved.

Falling property values are the major culprit behind the city’s financial woes. The city’s residential taxable value has fallen from $287 million in 2006 to $251 in 2012. In 2007, the average residential city tax bill was $4,676. It has fallen to $3,737 in 2012.