No tax hike in city spending plan

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Cumberland Times-News, May 23, 2012

Kristin Harty Barkley

 

CUMBERLAND — City residents won’t pay higher taxes next year, and trash removal costs won’t increase, according to the fiscal 2013 budget approved on a first reading Tuesday night.

But sewer rates are another story.

City leaders are expected to vote in two weeks on a sewer rate increase as they struggle to keep their $6 million sewer fund in the black. Currently, the operating margin is little more than $10,000 — or around 1 percent, said Jeff Rhodes, city administrator.

“This issue of the reserves is not unlike your automobile,” said Rhodes, who called the sewer fund reserve “inadequate” and “a real concern.”

“You know, I don’t really like having to have my tires rotated and the oil changed because it costs me $50 to $60 each time. If you don’t do that, the consequences are even worse. So we can either be proactive and invest in the system when the cost of money is lower, or we can wait for something to blow up. ... That’s often a more expensive route.”

Rhodes plans to present a proposal, including specific numbers, at the council’s June 5 meeting. Second and third readings of the proposed $34.4 million budget are also expected to be on the agenda.

Councilwoman Mary Beth Pirolozzi said she’s concerned about overburdening city taxpayers — especially with the state’s flush tax set to double this year — and she wants staff to consider that as they develop their rate increase recommendation.

Councilman David Kauffman said he believes that the city’s “enterprise” funds, including sewer and water, should operate within a certain margin, and rates should be adjusted accordingly.

“People say that they want government to operate more like a business,” Kauffman said. “A business would not be able to function with a $10,000 margin on a $6 million fund. So if we’re going to operate this government more like a business, we have multiple non-city users placing demands on this system. So that’s where the burden should be borne is by the people using the system.”

The proposed FY2013 budget also includes:

• An increase of $2.6 million in the general fund balance as part of continuing efforts to regain the city’s financial health and restore its A+ bond rating.

“It’s not a budget surplus,” Mayor Brian Grim said. “Really, this is a cash reserve. What this really is is a plan for financial recovery for the city.”

• The freezing of 15 positions that have become vacant over the last year. No furloughs or layoffs are planned.

• An increase of $100,000 for blight and graffiti removal.

• The creation of a General Services department comprising six current employees to begin catching up on deferred maintenance.

• A capital projects budget of around $916,000, and a capital lease financing budget of $281,000. City departments requested $2 million in projects.

“Our departments came to the table this year with very sharp pencils, knowing the burden we were under,” Rhodes said. “They really weren’t asking for things they didn’t think were absolutely essential.”

Rhodes said of the city’s approximately $45 million debt, a majority — around $30 million — is in the enterprise funds, such as water and sewer.

“I think there’s a feeling in the community that we have excessive debt,” Rhodes said. “Is the amount of debt we have a real number? You betcha. Is it a large concern or unmanageable? Absolutely not. And I want to reassure people of that.”

In other business Tuesday night, the mayor and council:

• Terminated a property management agreement with Ridgecrest Investments, which has been trying for the last two and a half years to lease portions of the former Memorial Hospital. The city has been spending around $250,000 a year to maintain the property, which has a number of tenants but remains largely vacant. The 10-year agreement with Ridgecrest stipulated that the city could get out of the contract if sufficient progress wasn’t made.

• Accepted a bid of $1.44 million from Belt Paving to repave Oldtown Road from Grand Avenue to Winifred Road.

Contact Kristin Harty Barkley at This e-mail address is being protected from spambots. You need JavaScript enabled to view it. .