This is an update on the City Council’s work concerning the municipal budget and the local tax rate.
Timeline and Where We Are. The Council will be voting tonight on amendments to reduce or increase spending on various City programs and initiatives as we move toward a final budget and tax package for Fiscal Year 2019 (which starts July 1). After tonight’s session, staff will prepare a consolidated resolution based on our votes, and we’ll vote on the overall budget and tax package in each of our following two meetings, with the final vote on May 16.
My goals are to preserve key programs that provide services to residents, while working to keep the property tax rate low. I also want to continue supporting reasonable Council priorities. In that regard, I’m pleased the budget includes some relatively modest new items like exploring partnerships and grant opportunities to increase healthy snack options in our after-school programs; providing weekend and evening programming for active seniors; implementing a Rental Inspection Watchlist aimed at avoiding long-term maintenance violations at apartment buildings; featuring other-than-English language articles in the City newsletter; and continuing to put money into the affordable housing fund.
More broadly, though, given the uncertainty around the impact of the new Federal tax law, the fact that many residents have seen increases in their assessments, and the reality that we already have a number of new initiatives underway, I’d prefer to avoid taking on expensive new obligations or starting up costly substantial new efforts. That’s a challenge, with the City Manager’s proposed budget calling for five new staff positions and an increase in the property tax rate.
I’m hopeful we’ll be able to whittle back at least some of those new positions and reduce the tax rate, as we did in each of the past two years. That’s what I’ll be working for tonight. Based on our discussion during Monday’s Council budget session, we’ll have a number of spending reduction amendments on the table. Taken together, they’re sufficient to cut the current tax rate. However, I don’t know enough at this point to be able to predict how the Council will vote on the amendments or where we’ll end up on the overall budget numbers or the tax rate.
The Numbers. Our current local property tax rate is $0.5348 per $100 of assessed property value. For a home worth $600,000 that translates into a tax bill of $3,209. The proposed budget calls for increasing the rate to $0.545 per $100, which would produce a $3,270 tax for the same $600,000 home. That can be contrasted with the Constant Yield rate of $0.5075, under which the City would take in the same aggregate amount of tax revenue as in the current year. At Constant Yield, the owner of a $600,000 home would pay $3,045 in taxes.
I’m supporting a group of amendments that would save about $750,000 by eliminating two of the proposed new positions (a Police positions and an Economic Development position); dropping extra funds for our Police pension above what’s recommended by our independent actuary; reducing sidewalk improvement funds; cutting the public art and community grants programs; and eliminating funding for focus groups connected to our resident survey. I think most of these are meritorious programs, but we can’t do everything.
If all those reductions are approved, we’d be over 80 percent of the way to Constant Yield. On the other side of the ledger, the low bid for the Flower Avenue Green Street project, which is funded mostly by grants, came in $230,000 over budget. With that additional money added in, we’d get about 60 percent of the way to Constant Yield, which would lower the rate to about $0.525 (and lead to a tax bill of $3,150). Of course Councilmembers may vote against some of these cuts or propose increases in other areas. In addition, homeowners whose assessments have risen may see increases in their tax bills even if we cut the tax rate.
I appreciate the concerns expressed by a number of residents who would prefer a budget system that is more predictable, and connected to an overall bottom line at the start of the process. So looking ahead, I’ll be exploring some additional approaches, including as some have suggested, the idea of calculating a Constant Yield budget as one of our starting points.
Residents who wish to express their views on these topics, in addition to reaching out to me via email, are welcome to do so during the public comment period at tonight’s Council meeting, which starts at 7:30 PM.
Takoma Park City Council