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Grandview City Council agrees on tax hike

GRANDVIEW - The Grandview City Council met last night (Monday) to decide how much to ask local voters to tax themselves.

The city is expected to absorb $72,000 in losses this year in its general fund. That fund will be broke by 2011 if additional revenues aren't found or services aren't cut.

Seeking help from the public on what council should do, the city hosted three town hall style meetings where input from the public was received. The message the council got was the public didn't want to lose any city services and were comfortable with a rise in utility taxes.

The question then became how much to raise taxes by. City staff said $320,000 in additional revenues were needed in the next two years to pay for city services that are currently offered. This number got mixed up though, with some council members believing the city only needed $320,000 for the next two years, not $320,000 for each of the next two years.

And that is why last night's meeting was called, so council could meet with city staff to determine just how much the city needs for the next two years to pay for city services.

Grandview City Treasurer John Myers told the council expenses rise by 5 percent each year while revenues only rise by 2 percent. With a $5 million budget, that means a shortfall of $150,000 each year.

Myers and Grandview City Administrator Scott Staples recommended to council a 2 percent increase in private utility taxes be put on a ballot for voters to decide on in May. With a 2 percent increase, the city would be able to maintain city services for 2009 and 2010, plus increase the general fund ending balance by almost $200,000. This would allow for a rainy day fund for the city to pay bills when money is tight.

If the 2 percent increase is extended past two years the city would still face an $83,479 deficit in 2011 and would have to find additional revenues or cut services. If the 2 percent increase was taken away after 2010, the city would face a projected $403,479 deficit.

The sticking point for Grandview Councilman Mike Bren was the extra money being added to city coffers. He said the spirit of the discussions at the town hall meetings was to ask for money just to keep city services, not increase the general fund ending balance. He said he didn't feel comfortable with establishing a rainy day fund, noting the city doesn't need $640,000 in the next two years to pay for city services, but only $450,000.

Other council members said the residents at the town hall meetings understood the city needed $640,000 over the next two years but still went along with Bren's idea of a 1.5 percent increase over the next two years with a sunset date of Dec. 31, 2010.

Council directed Staples to draw up an ordinance stating that for the next council meeting, Monday, March 17. Grandview residents will vote sometime in May to approve or disapprove the 1.5 percent tax hike.

What a 1.5 percent increase will do is give Grandview an additional $240,000 a year for the next two years. With the tax hike, the city is looking at a projected surplus in 2009 of $86,607 but a projected deficit in 2010 of $51,669. That is, of course, if other revenue can not be found.

Even with the projected deficit in 2010, Grandview should have an ending fund balance of almost $600,000, which is a $35,000 increase over what is projected at the end of 2008.

With the 1.5 percent utility tax hike increase going away after 2010, the city is projecting a $400,000 deficit in 2011 in the general fund.

Because of this, council will be looking to raise money again in 2011 if revenues don't change.

If Grandview residents do not vote to increase the private utility tax this May, city services will be cut.

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