Approved $54.16M budget includes nearly 10-cent levy increase.

By JEFF ABELL

jabell@thehawkeye.com

In a 3-2 vote, the Burlington City Council approved a $54.16 million budget that includes a nearly 10-cent property tax levy hike.

At Monday's special meeting, Mayor Bill Ell, along with councilmen Jim Davidson and Christopher Reed, voted to approve the 2010-11 fiscal year budget. Councilmen Robert Fleming and Matt Murray voted against passage.

Davidson, Ell and Reed indicated they could live with a 9.6 percent tax increase for the next budget year, which was more than 20 cents less than originally proposed. However, the trio added that additional cost-saving measures needed to be implemented.

"I'm all for keeping the tax rate down because I pay taxes like everybody else," Davidson said. "My goal was to cut that 30 cents in half. We have now cut it by two-thirds, and I'm satisfied with that."

City Manager Doug Worden reminded the council the tax levy hike was made necessary due to higher-than-anticipated employer pension contributions totaling about $190,000 more than officials had projected.

Separately, Fleming and Murray argued against adoption of the budget, both agreeing the current levy rate should be maintained.

Next year's proposed budget had called for increasing the tax rate from $14.92 for every $1,000 of assessed valuation to $15.22 beginning July 1.

Based on the 9.6 percent increase, rounded up to 10 percent, the new property tax levy rate will be approximately $15.02 for every $1,000 of assessed valuation.

Fleming said any property tax increase will negatively impact homeowners in a time of financial uncertainty.

"I think you have to raise taxes sometime, but I don't think now is the time to do it," he said. "I think it would send a positive message to the populace here if we said we're going to hold it (the levy) one more year."

Additional funds needed to offset a spike in the Iowa Public Employees Retirement Systems Municipal Fire and Police Retirement System of Iowa can be found within the budget, according to Fleming.

In July, the city's IPERS contribution rate will jump from 6.65 percent to 6.95 percent next fiscal year, with the fire and police pension rate increasing from 17 percent to 19.90 percent.

Murray took issue with Worden's assertion that reducing the proposed tax levy increase further would come at the expense of city personnel.

He added that the tax hike coupled with a likely property tax increase from the Burlington School District and an increase in the state's rollback will financially impact taxpayers when they least can afford it.

The state rollback for residential properties is moving from 45.59 percent this fiscal year to 46.91 percent, meaning the city will be able to tax against more of a home's worth.

"There is still money to be found," Murray said. "I don't think this is a good time to be raising people's taxes. People are strapped for cash, and we have to make our best effort to try and see if we can bring this down to zero."

For the next budget year, health-care costs were projected to increase by 9.48 percent, but plan changes made through negotiations with union officials reduced the rate to 7.38 percent.

Recent negotiations with the Communications Workers of America, Local 7176; Local 828 of the American Federation of State, County and Municipal Employees: and Local 301 of the International Association of Firefighters reduced premium increases further.

"Plan design changes reduced the rate of increase to 3.4 percent," Worden said. "Two of the unions have already ratified it. That translates into about 4.5 cents that can go to property tax relief."

A total of $50,000 from the city's economic development fund, which totals approximately $165,000 annually, and $50,000 from hotel/motel tax revenues also will be used for property tax relief.

Together, the $100,000 equals about 16 cents taken off the original 30-cent tax levy increase.

Hotel/motel tax revenues totaling $600,000 are proposed to be used to pay for several projects next fiscal year, including $17,800 for repairs at Memorial Auditorium, $7,000 for landscaping at Snake Alley and $46,000 for golf course replacement equipment.

The council has not determined where the $50,000 in hotel/motel tax funds will be shifted from for property tax relief.

Davidson suggested $50,000 be reduced from the estimated $305,000 earmarked for the Burlington Convention and Tourism Bureau, which is a part of the Greater Burlington Partnership, the chamber of commerce's umbrella organization.

Approximately 50 percent of hotel/motel tax receipts generated annually are received by the agency.

Leon Shahan of Burlington argued the council should eliminate the entire "subsidy."

Next year's budget also calls for an 8 percent increase in sewer fees on July 1 and another 4 percent on Jan. 1, 2011.