Assembly takes first look at new budget

Projected revenues higher; school district funding expected to remain unchanged at $38m

January 13, 2006

DARRELL L. BREESE\Frontiersman reporter

PALMER - New borough budget projections bring a mix of good news an bad for property owners and the borough.

The Mat-Su Borough's finance director, on Tuesday night, presented the assembly with a first look at projected numbers for the fiscal year 2007 budget.

According to Finance Director Tammy Clayton, projected revenues are up, despite operating under the tax cap adopted last fall and despite increased initial numbers for the borough's road service and fire service areas that reveal they are facing a deficit for the coming year.

Borough Manager John Duffy greeted the news with mixed emotions.

&#8220I am happy the areawide funds are up and appear to be at a surplus,” he said. &#8220But overall, I would say the initial outlook is poor, especially when looking at the road and fire service areas.”

Clayton projected the borough would receive $93,893,742 in revenues for the areawide fund, including property tax, vehicle tax and excise tobacco tax.

She also estimated a total expenditure for the FY2007 budget to be near $86 million. That includes funding the school district at $38 million (the same total as last year) and $46 million in operating expenses. The remaining expenditures include debt retirement and other capital expenses.

&#8220The projections reflect an increase in revenues of approximately 15 percent over last year,” Clayton said. &#8220But it is not because of higher taxes. The tax cap freezes the mill rate at 10.81 mills, a reduction of .07 from last year.”

The increased revenue stems from an estimated 12 percent increase in the assessment of the average home in the borough.&#8220With that in mind, taxes on a $200,000 home will still go up approximately $100,” Clayton said.

Mayor Tim Anderson pointed out what the assembly would have to do in order to keep the 2007 tax bill similar to what property owners paid in 2006.

&#8220We would have to lower the estimated mill rate from 10.81 a full point,” Anderson said. &#8220That would lower the estimated revenue about $6.5 million and eat away any reserve there is in the projection we are looking at.”

Calculating the areawide funds under the tax cap didn't appear difficult, based on Clayton's projections.

&#8220I think the assembly acted very responsibly in adopting the tax cap,” assembly member Jim Colver said. &#8220In some ways it will make the entire budget process easier.”

While the areawide budget projections looked good, an examination of the road and fire service areas revealed a problem.

&#8220I see some very difficult decisions coming as the estimated numbers become more concrete,” Duffy said. &#8220Especially in regards to the service areas.”

The tax cap, which limits the rate at which the property tax rate can increase, also limits the rate at which service area taxes can go up. This might limit how often roads are plowed in the winter and the level of service provided by the fire department.

&#8220Roads and fire service are vital,” Duffy said. &#8220The tax cap really tightens the reins on both funds for the entire borough. Even with the allowed increase in the mill levy for them, the expenditures still outweigh the revenue.”

Under the tax cap ordinance approved by the assembly, residents in the service areas will be able to vote in an increase in their mill rate to make up the difference. However, if voters approve the increase, the change will not take place until the FY2008 budget.

&#8220That leaves us in a real pinch for the coming year,” Duffy said. &#8220I am really troubled by the projection for the service areas and what that will mean for the coming year. There will need to be a lot of belt tightening to make it work.”

&#8220The good thing is that all the numbers we saw tonight are preliminary,” Duffy said. &#8220We should have a better idea of where we stand by mid-February when the tax assessments are finalized.”

Duffy must present his budget to the assembly for review by April 6.

Contact Darrell L. Breese at 352-2267 or darrell.breese@frontiersman.com.