Palmer City Council weighs budget

PALMER — The city manager says he will place unexpected budget surpluses in the city reserves.

Though the move might seem like the boring choice, it is required in part because of a single day during the height of construction season this year when the city didn’t have enough money to pay its bills, according to city manager Joe Hannan.

“In some ways, we were a victim of our own success,” he said. “We had so many grants from the state that we got to the point where were close to — and at least for one day — we didn’t have enough cash to pay our bills.”

The city received numerous grants in 2014 for state construction projects, but contractor bills briefly outpaced the incoming grant awards, and city reserves weren’t up to handling the bills as well as monthly employee salaries and other costs, Hannan said. Awards and bills have since caught up with each other, Hannan said.

The unassigned fund balance presently sits at $1.2 million, according to the proposed budget. To push reserves to the target, city officials will have to maintain reserves of slightly more than $1.6 million, according to calculations provided by city officials.

Increased retail sales (3.5 percent in 2014, and an projected 4.5 percent increase in 2015) drove the $500,000 sales tax revenue bump. An expected double-digit increase in health insurance, estimated at 17 percent as recently as Oct. 15, also failed to materialize. Rates will instead increase about 5 percent, resulting in an additional $200,000 or so for the city, according to Hannan.

The proposed city budget — city council members are on schedule to conclude a review by Tuesday — assumes a flat mill rate of 3.00. That means a Palmer house assessed at $200,000 would owe $600 in property taxes for the fiscal year 2015 budget, the same amount owed in the present fiscal year. However, that figure does not include additional borough property taxes.

Palmer residents also will pay an additional 15 percent in wastewater fees, to $23.52 per month plus sales tax due to increased operating costs. Commercial customers also will face a 17 percent increase in solid waste collection fees, due to increased fees at the borough dump, Hannan said. Landfill fees are set to increase from $87 to $110 per ton on Jan. 1, 2015.

The council also will consider increases to rental fees for the MTA Events Center.

The council members have added some items to the budget, including about $48,000 to replace 20 sets of aging personal protective equipment — also known as turnouts — for the Palmer Fire Department. In addition, council members asked Hannan to provide projections for a potential $50,000 expenditure for up to 500 folding chairs and tables for the MTA events center, as well as a shipping container in which to store them. City employees also will receive a 3 percent cost of living raise for the first time since 2008, according to the proposed budget.

City council members also have altered some proposals. For example, when public safety director Jon Owen retires in 2015, his position will be eliminated, leaving the police chief and fire chief in charge of their respective departments and reporting directly to city managers. Owen also serves as a part-tme risk management evaluator and served as part-time airport superintendent (until the hire of part-time superintendent Jeffery Combs in February this year). Hannan had originally proposed turning each of those part-time positions into a city project manager position and a full-time airport superintendent respectively. City council members balked at the risk management position, but the airport superintendent position survived after motions to first eliminate and then postpone its enactment until July died in deliberations this week.

The airport has morphed from a liability to a bright spot, according to Hannan. An $857,000 settlement in 2011 over an FAA complaint about airport financial management has been paid, and the city is working through the last of several material conditions of the settlement, including upgrading a fence separating the runway from the Palmer Municipal Golf Course. A draft lease with a new potential customer will likely be submitted to the council for approval in January, according to Hannan.

“We need somebody to be doing this,” he said. “I can’t do it with just me. I can’t do it with a half-time and me. The return of the investment justifies the expense.”

City revenues are expected to increase about 3 percent overall, from $11,154,673 in 2014 to $11,507,493 in 2015. At the same time, city expenditures are expected to increase about 4 percent, from $11,059,054 to $11,507,144, according to budget projections.

Contact Brian O’Connor at 352-2269 or brian.oconnor@frontiersman.com.