Zero increase budget possible this year, town administrator says
Times are tough and town Administrator Bruce Keiser believes that the Town Council and School Committee can present islanders with a proposed budget that does not increase the current property tax rate.
Keiser said the prevailing economy is the reason he hopes the town can freeze the island property tax rate at $8.11 per $1,000 of assessed valuation.
For an average home appraised at $480,000, that means a tax bill of approximately $3,800, he said.
"We are keenly aware the taxpayers — all households and businesses — are taking a major hit," Keiser said. "Any tax increase proposed would have to be carefully thought through."
Given "certain revenue assumptions," Keiser said it's possible for the Town Council to fashion a budget with a bottom line that is less than the current year.
Keiser said the zero increase town budget that he plans to present to the Town Council was achieved through using some of the town's budget surplus to pay down debt.
"We are fortunate that our overall fund balance is 17 percent of what our operating revenues are," he said. That amount is far above the standard that municipalities must maintain for a good bond rating, he added.
Jamestown has a $3.8 million cash financial cushion. The town can reduce that budget surplus to 15 percent of the budget — about $750,000, Keiser said, and still maintain its positive bond rating.
Keiser said the town has lost about $75,000 from the slowdown in building permits and real estate transfer tax revenue from real es- tate sales. In addition, another $75,000 has been lost in reduced investment interest on the town's large cash surplus.
Combine those reduced monies with the $136,000 lost in state aid and the town is down nearly $300,000 in its annual anticipated revenues, Keiser said.
Keiser plans to make up for that shortfall in several ways, without raising taxes. Here's how:
Keiser said the rate of growth in residential sector in Jamestown did not fall off in 2008, as it did elsewhere. Jamestown had $20 million new value added to its $7.75 billion property tax base in 2008.
That new value will generate $150,000 to $160,000 in new property tax revenues, Keiser said.
Keiser has also worked with the town's department heads to scale back spending and found another $30,000 to $40,000 that could be trimmed from the new budget.
He said the proposed budget will freeze the salaries of all department heads. Three union contracts with the town are set to expire in 2010, he added.
But the biggest savings will come from the using the cash surplus to pay down debt, thereby removing that debt service from the budget "without harming our financial position," he said.
Keiser proposes to reduce the town debt by $270,000. He said the Town Council has expressed interest in continuing to identify debt that can be paid off through the cash surplus.
Keiser said the budget he will present to the council covers all the necessary basics, including capital improvement. The town will continue to set aside money for affordable housing, road paving, and police vehicles, he said.
"The current economy does not allow us to play by the normal rules," Keiser said of the proposed town budget. "What we hope to achieve is the property tax bill not rising at all."
Keiser cautioned that there are many variables that could make the zero increase budget difficult or impossible to achieve. He's assuming that other state revenues that Jamestown receives will be level funded, such as the $480,000 from the motor vehicle tax the $70,000 in library aid.
On Tuesday, Governor Donald Carcieri announced his proposed budget that will use federal economic stimulus funds to help meet the state's projected budget deficit.
Keiser said there were no surprises for Jamestown in the governor's announced budget. Jamestown will lose its municipal revenue sharing money, as expected.
On the positive side, the governor did restore some state revenue sharing municipal funds that had been cut from the current budget year, Keiser added.
State school aid is expected to continue in 2010, Keiser said.
Last week the Town Council and the School Committee met in a joint session to review the proposed school budget. A report on that meeting appears on page 3 in this newspaper.
Keiser said it was up to the School Committee to determine how to spend its money, but the responsibility lies with the Town Council to determine how much money the School Committee is allowed to spend.
Public input on the proposed town budget is welcome. The Town Council will review the proposed budget at a workshop scheduled for Monday and Tuesday, March 30 and 31.
Voters will be asked to approve the proposed budget at the annual financial town meeting in June.