There have been a number of thoughtful comments on neighborhood lists about Takoma Park’s budget, our local tax rate and spending priorities. As the City Council moves forward in April and May on the budget for our 2018 Fiscal Year (which starts on July 1), my goal will be to seek appropriate levels of funding for programs that strengthen our community and to hold the line on taxes. Before offering some thoughts on those matters, I thought it would be helpful to give a little background on how the proposed budget was developed, the schedule going forward, and opportunities for resident input.
Approving the budget is one of the most important responsibilities of Councilmembers, and it’s vital that we have as good a sense as possible of the views of those we represent when we take up that task. With the Council now actively considering the budget, we’re in the phase where feedback from residents is most important. City Manager Suzanne Ludlow’s proposed budget will form the basis for the Council’s work over the next few weeks. We’re scheduled to finalize the budget on May 17.
So, I encourage all interested residents to participate in the process by attending our Council sessions between now and that date. Residents can offer their views during the public comment period before any of our Wednesday Council meetings. I also welcome comments via email, phone or in person (contact me directly if you would like to meet). In addition, there are public hearings on the tax rate and the budget on April 26, starting at 7:30 PM, at which anyone can speak for 3 minutes.
BUDGET PROCESS TIMETABLE. We started the budget process in January with two Council “retreats” that were open to the public. During these meetings my colleagues and I reviewed last year’s Council Priorities and considered progress in the previous year, as well as new issues and concerns. While we made changes to the document, the final version retains our five overall priorities: A Livable Community for All; Fiscally Sustainable Government; Environmentally Sustainable Community; Engaged, Responsible, Service-Oriented Government; and Advancing Economic Development Efforts.
To me, you could summarize the impact or retaining these priorities by saying we want to continue doing the things that make Takoma Park a unique, wonderful place. That being said, it’s valuable to go through the exercise of updating the list, because it informs the Council’s work on the budget and many other issues over the course of the year, and it can help serve as a guide for City staff in their work.
After completion of the Priorities, each of us met with the City Manager to discuss the budget. Based in part on the Council’s input, she prepared the proposed budget, which was made available to the Council and the public at the beginning of this month. She presented it formally to the Council on April 5. Then at last week’s Council meeting on April 12 we had a public hearing on the budget, which was very well attended (a couple of dozen residents spoke up on a wide range of topics).
Starting tonight, and on the following two Monday nights (April 24 and May 1) the Council will hold “work sessions” where we will actively engage with City staff and each other about key budget topics (work sessions don’t include public comment periods). Tonight (April 17) the topic will be capital projects; on the 24th the focus will be Council priorities; and on May 1 we’ll cover each City department’s budget. In addition, on the evening of Tuesday May 2 I’ll be hosting a meeting for Ward One residents to discuss the budget (I’ll announce the time and location soon).
On Wednesday, May 3 we’ll have what could be a late-running Council meeting at which we’ll offer amendments to the proposed budget. They may include spending increases and reductions, as well as changes to the tax rate. In the end, all the approved amendments will be incorporated into a revised budget package that evening. After May 3, we’ll likely see few if any further changes -- we’ll have a voting session on the amended package on May 10 and then the final vote on May 17.
TAX RATES. The City Manager’s budget proposes a property tax rate of $0.56 per $100 of assessed value (which translates into $560 per $100,000 of value). This rate is down from the current rate of $0.5675 per $100. However, because many Takoma Park property owners are seeing an increase in assessed value, this lower rate may still result in higher tax payments. According to the City Manager’s blog on the budget, for an average City home assessed at $400,000 the tax increase would be $104.
This contrasts with the “Constant Yield” rate, which is slightly lower at $0.5358. The Constant Yield rate is the rate at which the City’s overall revenue from the local property tax is estimated to be the same as this year. Because it’s an aggregate measure of the total property tax revenue, even under Constant Yield some residents could still see upticks in their tax payments. But on the whole Constant Yield would help keep taxes about where they are this year. I’m very concerned about maintaining affordability for Takoma Park residents throughout the City, and as the Council moves forward on the budget I’ll be working for approval of a tax rate as close to Constant Yield as possible.
With each cent of the tax rate equal to about $225,000 in expected revenue, the difference between the proposed rate of .56 and the Constant Yield rate of .5358 is about $544,000. In other words, if a majority of the Council votes for $544,000 in net spending reductions from the proposed budget, it will take us down to Constant Yield. Last year I supported a combination of spending increases and reductions with a net impact that would have taken us very close to Constant Yield. Unfortunately, I was in the minority on some issues, and as a result the Council didn’t reduce the tax rate as much as I would have liked. But I was proud that, even with the rate reduction, we funded some significant new priorities, including establishment of the affordable housing fund.
KEY PROGRAMS. This year there are areas of new spending in the budget that I support, including the Library Renovation project, plus additional funding for affordable housing. I would also like to explore a reduction in the inventory tax, which applies to local businesses and has a disproportionate impact on smaller operations. At the same time, there are areas in the budget, including what I believe are higher than necessary budget reserves plus payments into the Police pension system above the actuarial recommendations, where we can make responsible reductions. As the process unfolds, we’ll consider additional areas that can be cut and potentially others where modest increases may make sense, and I’m hopeful we’ll be able to enact a budget that strengthens our community in affordable ways.
I’ll provide more details in future messages, but I do want to say a few words about the Library renovation project, which some residents have written about on the neighborhood lists. In my opinion, the Library is one of the important local resources that makes Takoma Park a great place to live. It serves a range of populations in the City, from toddlers to school children to college students to senior citizens. It has programs for speakers of languages other than English, and it has about 17,000 program participants each year. While obviously not everyone participates, I think it’s noteworthy that the annual utilization rate is about equal to the City’s population – this is a resource that residents use!
But the Library is over 60 years old and needs considerable improvements just to remain in operation at its current size. And, unfortunately, it falls short of being a true 21st Century institution, not only because the physical plant is in such poor condition, but because its book stacks are out of compliance with ADA access requirements, its staff area is inadequate, it has no dedicated space for teens, its public computer technology needs an upgrade; its lighting and HVAC are outdated, etc.
My view is that if we address those and other deficiencies, not through short-term spending, but by asking residents in future years through long-term 30 year bonding at the current relatively low rates to contribute, that would be a responsible way of paying for the renovation. The Council will be doing a deep dive into the numbers, but the proposed budget indicates that 30 year bonding would add under $400,000 to the annual budget over the length of the bond. In addition, the proposed bond financing appears to be well within the City’s Charter guidelines for taking on longer term indebtedness. Those guidelines relate to measures like bond amounts as a percentage of annual City revenue, as a percentage of total assessed valuation of the City’s property, and as a percentage of the City’s annual budget. For these reasons I support the Library renovation and bonding, and I look forward to a healthy discussion on all aspects of the proposal.
Finally, I do want to mention storm water fees, which also have a financial impact on residents, but not as part of the property tax since fees are imposed separately. As you may be aware, Takoma Park homeowners currently pay an annual flat fee of $55. Under the proposed budget that fee would rise to $92. I’m opposed to that increase.
I strongly support the goal of improving our storm water management, and I agree we should provide funding to continue working on that issue, in alignment with Federal and State guidelines. However, I would also note that the City plans to conduct a survey to determine whether the current system in which all homeowners pay the same fee should be maintained. At a minimum, I think we should wait until we have the results of that survey before we make any decisions about changes to the fee.
Future Messages. I’ll be sending out additional messages on the budget (this one is already probably too long), and I’ll plan on including more specifics about many of the above issues and other budget matters in future emails. Meanwhile, please let me know your thoughts, and I hope to see you at some of the public events mentioned in this note.
Takoma Park City Councilmember