City council and guests received an overview of the factors driving the 5% hike in city taxes under the proposed 2009 budget on Monday night.
It's the economy, stupid.
At least that's where Mayor Rick Gray and City Business Administrator Patrick Hopkins pin most of the blame.
"We're definitely seeing an impact from the national economy on our local revenues," said Hopkins.
Gray brought up "unfunded mandates" from the state and federal governments, and also noted the high number of not-for-profit organizations located in the city.
"We're probably 30% tax-exempt," Gray said. He added, "It's logical that most of them are located in the city" but went on to call it a burden on taxpayers and said that the state and federal governments should provide some tax relief.
Hopkins said the city has "been able to pretty much hold the line on expenses." In fact, total expenditures have risen only 1.8% above the 2008 budget, according to the figures he presented.
Instead, the problem is on the revenue side of the equation.
Sources of projected loss include: $300,000 (or a 37% decrease) in revenue from building permits, $450,000 (a 50% decrease) from interest earnings on the city's reserves, and a 10% drop from 2008 in revenues from the real estate transfer tax.
If the city were to balance the budget without tapping reserves, a tax increase of 25% would be necessary, according to Hopkins.
Instead, the city is hiking taxes 5% and tapping $3.6 million from its reserves to make up the deficit.
Hopkins stressed that the city probably won't require all of the $3.6 million, but it's being budgeted for just in case.
The 5% tax increase means that a median city wage-earner ($36,500/year) owning a median-value house ($76,000) can expect to see his/her city taxes increase by a total of $39 in 2009.
To cut costs, the city is eliminating 11 full-time positions for 2009 and is capping all salary increases for both unionized and non-unionized employees at 3%.
Ominously, Gray noted: "There's no guarantee that there won't be layoffs this year."
The proposed 2009 budget can be found here (pdf). (Hint: after reading the Mayor's Message, skip to page 29).