City budget passes with 25-cent tax increase
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The budget presented to the board by the Finance Committee not only had a 25-cent tax increase for city residents, but cut city department budgets and removed the cost-of-living pay increases for city employees. These measures were approved by the board in order to stop the decreasing fund balances within the government.
Without the increase in taxes, the projected general fund balance would be $583,213 on June 30, 2007. With the 25-cent tax increase, the projected general fund balance will be $1,005,509 on June 30, 2007.
If the tax increase was left out, the city would not be able to meet obligations without borrowing additional funds. City obligations include compensating city employees, who get paid every two weeks, bonds that come due in August totaling $200,000, workers comp insurance due July 1 totaling $182,064, and building and property insurance due July 1 totaling $41,825. Last year?s general liability and insurance on vehicles was $166,609 due on Aug. 1.
Alderman Bobby Kirby agreed with the budget decision saying, ?We don?t have an option. We cannot allow the continuing depletion of available funds. If we don?t have a beginning balance of $800,000 to $1 million, the city will be broke by October, November or December and we will have to start borrowing money. That?s just not smart. The state warns against operating like that.?
Elected officials are in agreement that funds are decreasing and this decrease must be stopped. The solution is where the disagreement arises.
?A tax does not fix the problem,? said Barnes. ?I want to fix the problem. Until we take a close look at our services, the problem will continue. Manchester?s tax rate is rising. It could go from $2.42 to $2.62. I see McMinnville?s tax rate headed quickly in that direction. All we are doing with this tax increase is fixing the fund balance. There is absolutely no easy fix but a tax increase is not the answer.?
Dwindling fund
According to elected officials, the city?s general fund balance has been steadily declining:
? June 30, 2004 ??$2,772,311
? June 30, 2005 ? $2,649,684
? June 30, 2006 ? $1,731,219