Vacant storefronts dot the community’s commercial districts, reflecting the city’s flat sales tax returns this year. Flagging revenue streams — sales tax, building permit fees and others — are putting a pinch on the city budget as the Louisburg City Council grapples with holding the line on taxes. (Photo by Andy Brown / abrown@miconews.com)
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City feeling the economic pinch
Council grapples with holding the line on taxes in the face of flagging revenues
By Kristen Waggener, kwaggener@miconews.com
Flat property valuations, sluggish sales tax figures, low building permit numbers and increasing debt service.
It’s a disastrous combination, one that is forcing the city to reevaluate the way it operates if it wants to keep the mill levy at 26.106 mills for another year.
But if last week’s meeting is any indication, keeping the mill levy steady is exactly was most of the Louisburg City Council wants to do.
Economy’s effect
Judging by the number of people who moved in to Louisburg in 2004, 2005 and 2006, the next two years were bound to see the same steady influx of rooftops, property taxes and sales tax income, but the U.S. economy hit a roadblock in 2007 and all but halted in 2008.
Rising costs have put a strain on everyone, including the city.
“At one time, it was just fuel, fuel, fuel,” said City Administrator Jeff Cantrell.
Now, it’s fuel, paint, herbicides, water chemicals, tires, shipping, street products — nearly everything the city purchases.
Historically, Cantrell said, the cost of a city doing business rises between 3 and 4 percent each year, but the city’s 2009 budget is looking to see an increase much higher.
“Today’s market is looking at numbers indexing between 12 and 15 percent, including fuel,” Cantrell said.
Concerning indicators
While the cost of just about everything is rising, the city’s income remains stagnant.
Data shows through June, $364,745.89 was received in sales tax revenue, while the 2008 budget is based on receiving $699,500 for the whole year. City sales tax revenue rose 3 percent from 2006 to 2007, but if sales remain steady, sales tax revenues will just hit the city’s budgeted mark, which is about 2 1/4 percent higher than 2007.
Property tax received from property valuations also looks flat, Cantrell said.
Preliminary estimates from the county appraiser’s office suggests an approximate 3 percent increase over 2007, Cantrell said, while in previous years, Louisburg has seen a 4 or 5 percent increase.
“Three percent is nice,” Cantrell said, “but by the time you account for all the delinquencies and appeals, we’re projecting property taxes to remain flat.”
And while Louisburg is seeing isolated residential building, income previously received from building permits and utility hook-up fees, among others, is not coming in at the same rate it once was.
In 2007, Louisburg issued 97 new housing permits; to date in 2008, the city has issued 14, which lags significantly behind where it would have to be to keep up with last year’s numbers.
Cantrell said Louisburg received about $150,000 in permit fees in 2007.
“That won’t be the case for ’08, and it certainly won’t be the case for ’09,” he said.
To date in 2008, just $30,580 has been collected in building permit fees.
The final big piece of the budget puzzle comes with the city’s debt service, which will require 8.8 mills for 2009, instead of 5 mills in 2008. The increase is associated with improvements to the north lagoons, Cantrell said.
“This will require us to operate the general fund on less millage than last year while factoring for increased operating costs that are already occurring,” Cantrell wrote in a memo to the city council.
Balancing act
Mayor Arlen Thompson and several of the Louisburg City Council members have made it clear that a flat mill levy is what they want to see.
Cantrell’s memo to the council outlines several steps that must be taken to keep the mill levy flat. Those include reducing staff salaries with Project Coordinator Ted Hayden’s retirement; eliminate all funding for new vehicles with the exception of one police car; freeze one vacant full-time police officer position and one full-time public works position; and reducing seasonal labor, among other recommendations. After about an hour of intense discussion, council members were divided on whether allowing Police Chief Ron Anderson to fill a vacant full-time police officer position is worth raising the city’s mill levy.
Council member Carolyn Karns indicated she supported keeping the city safer with more police presence.
“I’d rather see the mill levy go up a point or two than take away from police or fire,” she said at the meeting.
At the meeting, Thompson and council member Steve Ward strongly supported keeping the mill levy at 26.106 mills.
“Right now we need to make do with what we got and see where this economy goes,” Ward said at last week’s meeting.
Glena Windisch said she supports keeping the mill levy steady, and council member David Cannon said although he supports keeping the mill levy as low as possible, he has not ruled out raising it, if keeping the city functioning required a slightly higher levy. Sid Mitchell was not at the meeting, and was unavailable for comment.
“Why should the city ask for more money when people are having to suffer everywhere?” Windisch said. “The general public can’t just reach out and take more money when they need it.”
“As individuals, we’re forced to tighten our belts,” Cannon said. “I would like to try to explore not raising it. Even though (an increase) may seem small, you get enough of those small things, and they add up big.”
Cannon added he hopes that the proposed adjustments would be just for the short-term, with the city’s financial health looking better the next year.
With those indications, Cantrell said he’s working to prepare a budget that keeps the mill levy flat, with an option to include the potential frozen positions, which will raise the mill levy slightly.
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It’s a disastrous combination, one that is forcing the city to reevaluate the way it operates if it wants to keep the mill levy at 26.106 mills for another year.
But if last week’s meeting is any indication, keeping the mill levy steady is exactly was most of the Louisburg City Council wants to do.
Economy’s effect
Judging by the number of people who moved in to Louisburg in 2004, 2005 and 2006, the next two years were bound to see the same steady influx of rooftops, property taxes and sales tax income, but the U.S. economy hit a roadblock in 2007 and all but halted in 2008.
Rising costs have put a strain on everyone, including the city.
“At one time, it was just fuel, fuel, fuel,” said City Administrator Jeff Cantrell.
Now, it’s fuel, paint, herbicides, water chemicals, tires, shipping, street products — nearly everything the city purchases.
Historically, Cantrell said, the cost of a city doing business rises between 3 and 4 percent each year, but the city’s 2009 budget is looking to see an increase much higher.
“Today’s market is looking at numbers indexing between 12 and 15 percent, including fuel,” Cantrell said.
Concerning indicators
While the cost of just about everything is rising, the city’s income remains stagnant.
Data shows through June, $364,745.89 was received in sales tax revenue, while the 2008 budget is based on receiving $699,500 for the whole year. City sales tax revenue rose 3 percent from 2006 to 2007, but if sales remain steady, sales tax revenues will just hit the city’s budgeted mark, which is about 2 1/4 percent higher than 2007.
Property tax received from property valuations also looks flat, Cantrell said.
Preliminary estimates from the county appraiser’s office suggests an approximate 3 percent increase over 2007, Cantrell said, while in previous years, Louisburg has seen a 4 or 5 percent increase.
“Three percent is nice,” Cantrell said, “but by the time you account for all the delinquencies and appeals, we’re projecting property taxes to remain flat.”
And while Louisburg is seeing isolated residential building, income previously received from building permits and utility hook-up fees, among others, is not coming in at the same rate it once was.
In 2007, Louisburg issued 97 new housing permits; to date in 2008, the city has issued 14, which lags significantly behind where it would have to be to keep up with last year’s numbers.
Cantrell said Louisburg received about $150,000 in permit fees in 2007.
“That won’t be the case for ’08, and it certainly won’t be the case for ’09,” he said.
To date in 2008, just $30,580 has been collected in building permit fees.
The final big piece of the budget puzzle comes with the city’s debt service, which will require 8.8 mills for 2009, instead of 5 mills in 2008. The increase is associated with improvements to the north lagoons, Cantrell said.
“This will require us to operate the general fund on less millage than last year while factoring for increased operating costs that are already occurring,” Cantrell wrote in a memo to the city council.
Balancing act
Mayor Arlen Thompson and several of the Louisburg City Council members have made it clear that a flat mill levy is what they want to see.
Cantrell’s memo to the council outlines several steps that must be taken to keep the mill levy flat. Those include reducing staff salaries with Project Coordinator Ted Hayden’s retirement; eliminate all funding for new vehicles with the exception of one police car; freeze one vacant full-time police officer position and one full-time public works position; and reducing seasonal labor, among other recommendations. After about an hour of intense discussion, council members were divided on whether allowing Police Chief Ron Anderson to fill a vacant full-time police officer position is worth raising the city’s mill levy.
Council member Carolyn Karns indicated she supported keeping the city safer with more police presence.
“I’d rather see the mill levy go up a point or two than take away from police or fire,” she said at the meeting.
At the meeting, Thompson and council member Steve Ward strongly supported keeping the mill levy at 26.106 mills.
“Right now we need to make do with what we got and see where this economy goes,” Ward said at last week’s meeting.
Glena Windisch said she supports keeping the mill levy steady, and council member David Cannon said although he supports keeping the mill levy as low as possible, he has not ruled out raising it, if keeping the city functioning required a slightly higher levy. Sid Mitchell was not at the meeting, and was unavailable for comment.
“Why should the city ask for more money when people are having to suffer everywhere?” Windisch said. “The general public can’t just reach out and take more money when they need it.”
“As individuals, we’re forced to tighten our belts,” Cannon said. “I would like to try to explore not raising it. Even though (an increase) may seem small, you get enough of those small things, and they add up big.”
Cannon added he hopes that the proposed adjustments would be just for the short-term, with the city’s financial health looking better the next year.
With those indications, Cantrell said he’s working to prepare a budget that keeps the mill levy flat, with an option to include the potential frozen positions, which will raise the mill levy slightly.