Tax Rate Holds Steady in Saline

City of Saline residents will pay the same tax rate as they’ve been paying.

At Monday’s meeting, city council voted 7-0 to direct city staff to utilize the existing millage rate of 15.53 mills for fiscal year 2012-13.

The owner of a home worth $200,000 and a taxable value of $100,000 would pay $1,553 in property taxes to the city.

The property tax is expected to raise about $5,145,000, down from $5,462,000 this year and $5,609,000 last year

Prior to the meeting, city council debated financial options during a budget session. Even with stabilizing residential property values, the city faces an annual structural deficit as high as $600,000. Without cost cuts and revenue increases, the city would be broke by 2015.

The city is studying a budget that includes reducing the DPW from 14 to 10 employees, putting off expenses, elimination of the deputy police chief’s position and asking employees to contribute to their retirement benefits.

At Monday’s budget session, council member Jim Roth said that the city should levy its 1.8 mills of excess tax capacity to avoid borrowing for capital projects. Roth reasoned that taxpayers would be more comfortable with paying a higher tax rate on their devalued properties than they would be with seeing the city rack up more debt.

“The time is right, even though I hate to spend more money. We have the ability to levy more in tax I think it’s better to do that than to end up paying $1 million in interest,” said Roth.

Roth didn’t find support during the budget session. Council member David Rhoads said he understood Roth’s point, but that he believed a tax increase would be detrimental to the local economy.

“I am not in favor of a tax increase this year when the economy is beginning to increase,” Rhoads said. “We’ve already indicated to residents that there would not be a tax increase this year.

The other council members were in agreement on the tax millage for 2012-13. Council still has budget issues to consider for the upcoming year. The body must come to consensus on how to finance repair of the DPW roof.

City manager Todd Campbell said the city could “scrape by” this year, but he’s worried about the dwindling fund balance. With no revenue enhancements in 2012-13 and without bond for capital improvements, the city may burn through its fund by 2013.

“That worries me. In my training, we were taught that 15 percent of (the general fund) is a healthy fund balance. If we go into the red, or to those miniscule (fund balances) in the next few years, and then we have one little break, then we are done. We’re potentially in a lot of trouble,” Campbell said.

The city is modeling with conservative numbers. And the city is hopeful the revenue numbers will look rosier when a couple tax abatements expire. The bottom line could also improve if the city is able to sell any of its $3 million worth of property on the market.

Several revenue solutions for 2013-14 have been floated, including the maximum tax levy, the fire assessment, and a new tax for recreation.