The sum, approximately $1.1 million, originates from the 1-cent sales tax hike that took effect in April.
That’s not the entire amount the extra penny is expected to generate during fiscal 2013, which begins Oct. 1 — the entire amount is more like $4.2 million.
However, after concrete needs are met — such as $1.66 million for the police and firefighters’ pension fund, and the need to balance the city budget in the coming year — a shade over $1.1 million is expected to be left over.
Those leftovers should come up for City Council discussion this afternoon at 2, when members gather at City Hall to begin talking about next year’s budget. Likely to be noted: the resolution accompanying the original sales tax ordinance, a resolution that earmarked tax dollars to the schools and to economic development, albeit not with specific sums attached.
The new fiscal year begins Oct. 1, and a budget must be approved by Sept. 27. City Manager Don Hoyt sent a proposed $36 million budget to the councilman Aug. 27 to start this year’s budget process.
Coming in at $4.3 million more than last year’s budget, Hoyt’s proposal includes some additional revenue that changed what could have been cuts and belt-tightening into something more optimistic.
“What has saved us this past year and the year going forward is the sales tax,” Hoyt said, referring to the portion of the sales tax that entered the city’s coffers since April.
The additional revenue took what was going to be a $586,540 deficit in the budget into the black and bolstered the Public Works Department’s budget, allowing staff to do additional maintenance in the city.
But the City Council, which passed the 1-cent sales tax increase in January, has yet to decide exactly how to spend all the money the tax is expected to bring in later.
State legislation increased the city’s contribution to the police and firefighters’ retirement fund to $1.66 million in FY 2013, eating up a good portion of the projected $4.2 million in sales tax revenue. The law also changed the way the fund would be replenished, moving the allocation completely from the general fund instead of taking it directly from business license fees.
While that allocation was expected, other expenses in the city are increasing as well, while other income sources shrank:
• The city’s personnel costs increased $460,000, including a net increase of four staff and employees moving up the civil service pay scale.
• Rising fuel costs are also cutting into the budget, adding approximately $80,000 in expenditures.
• Less revenue is expected from property taxes and business licenses based on trends over the last few years. The budget reflects a total of $223,000 lost in those two areas, but the sales tax dollars helped offset those losses.
On the plus side, Parks and Recreation Department income, mainly from concession sales and membership fees, is going up. The city is estimating a $400,000 increase over the previous year, mostly from its new aquatic center which opened in April, Hoyt said. That money, he said, will help pay the city’s bond for the center — next year’s payment is $433,052.
When all the plusses and minuses are figured in, the proposed $36 million budget reflects a $1.1 million surplus from the sales tax revenue that City Council members may choose to allocate, said Jarrod Simmons, assistant finance director for the city.
“That’s kind of the idea, to give them some flexibility of whatever their policy decision is going to be for that amount of money for this year,” Simmons said.
The council must pass a budget well before newly elected council members take their seats, and that complicates the budget process this year in the minds of some of the current members.
Mayor Gene Robinson, who lost his bid for re-election, and Marcus Dunn, who is in a runoff for his seat, said they would prefer to leave the money in surplus for the new council members to allocate.
“(The new council) can spend it in the next budget cycle,” Robinson said.
While the resolution the council members passed along with the tax increase gives their view of how the money should be spent, Robinson said, he believes the final decision on how to spend the money should rest with the new council.
Vaughn Stewart, who will be taking over as mayor in November, also thinks the money should stay put.
“More planning is needed and more input from the citizens,” Stewart said. “We’ve got a finite sum of money and we’ve got all these city needs. We need to prioritize those needs.”
Councilman Jay Jenkins, who won re-election to the council, is also concerned that the new council members should have some input into the decision. But he’s not sure how that should be done or if the money should be left for the next budget cycle.
“They’ll be the administrators of a lot of that and we need to engage them in the conversation,” Jenkins said.
As for his idea of how the money should be spent, Jenkins said, he thinks the council owes it to the taxpayers to spend the revenue within the confines of what it was originally implemented to do. That’s why he voted to amend this year’s budget to use some of the money for downtown maintenance, Jenkins said.
He considered that to be economic development, one of the stated purposes for the new tax.
“We generated it for a purpose and we need to spend it for that purpose,” Jenkins said.
Seyram Selase, who will be taking over as Ward 3 councilman in November, said as a resident, he would like to see some of the money go to the local school system.
“I really think this is a great opportunity to show the school system that we recognize the improvements,” Selase said.
He would like to see the money invested into needed and innovative programs for the city’s schoolchildren and he said he thinks the Board of Education members are in the best position to know what those programs might be.
Councilman Ben Little, who lost his re-election bid, said he believes the money should be put into an escrow account, ready to pay back to taxpayers because he believes the tax was approved illegally.