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Budget hikes detailed
For Martinsville City Council
Wednesday, May 2, 2012
By MICKEY POWELL - Bulletin Staff Writer
Budget problems will force the city to make one of two choices: Generate more money or cut personnel and services, Martinsville Interim City Manager Leon Towarnicki said Tuesday.
Increases in water and sewer rates and the meals tax are part of the city’s fiscal 2013 budget proposal, which was balanced with $738,750 in reserve funds after spending needs amounted to more than projected revenues.
The new fiscal year will begin July 1.
During Tuesday’s budget work session, Towarnicki told Martinsville City Council that without using reserve funds and generating more revenue, the city will have to cut about $1.5 million from the spending plan.
That sum includes the reserve funds and about $750,000 in capital needs that the fee and tax hikes are intended to help pay.
The budget does not include any tax increases.
“There is no way” that the city could cut spending by $1.5 million if it did not lay off employees and reduce services, Towarnicki said.
However, at the request of Councilmen Gene Teague and Danny Turner, Towarnicki plans to present options for such cuts to the council during another budget work session Thursday afternoon.
A $3.50 increase is proposed in base rates for water and sewer services. That means city customers using 4,000 gallons of water for either service each month would see their water bills rise from $19.81 to $23.31. Their sewer bills would go up from $18.14 to $21.64.
Incremental increases to bills reflecting the use of more than 4,000 gallons would stay the same.
The increase is “substantial, I admit,” but it would produce about $500,000 annually, said Towarnicki.
Businesses in the city that sell prepared foods charge the meals tax along with state sales taxes. The meals tax would jump from 6 cents to 7 cents a dollar. That would mean an increase of 10 cents on a $10 restaurant meal or prepared foods.
Towarnicki said the meals tax was targeted for an increase because anyone eating in a Martinsville restaurant pays it, even people who live elsewhere.
Turner said a meals tax hike would be “grossly unfair” because people could bypass city restaurants and go to Henry County restaurants and save money. The county’s meals tax is 4 cents a dollar.
From Martinsville, he said, “you can go three miles in any direction and get a cheaper meal.”
According to city officials, meals tax revenue over the years has been put toward things such as school and capital improvement projects.
Teague said he would like to see each of the proposed increases eliminated.
“We need to look for ways” to reduce spending, he said, for taxpayers who — like the city — are financially strapped.
Plans are to hire a financial services firm to analyze city finances in detail and offer strategies for dealing with budget constraints that may continue well into the future if a major influx of revenue does not occur soon.
A request for proposals is to be sent out. Based on preliminary talks with one financial services firm, city Finance Director Linda Conover said it may cost the city about $20,000 to hire such a firm.
She did not say how long the city might need a financial firm’s services.
Getting some advice on long-term fiscal strategies “may help clarify the (financial) picture” at the least, said Vice Mayor Kimble Reynolds Jr.
Teague and Councilman Mark Stroud indicated they agree.
Also Tuesday, the council heard from Martinsville school officials about the schools’ financial needs for fiscal 2013. The city budget proposes level funds for the schools at $5,826,394, the amount they requested for the new year.
Mayor Kim Adkins told Superintendent Pam Heath she could not guarantee right now that local school funds will not be reduced. Heath said she did not expect such a commitment at this time.
Level funding does not mean the schools are not taking their share of cuts, Heath said, mentioning that they cut $1.7 million due to revenue reductions and increased expenses.
The cuts are expected to include between 30 and 35 jobs, about half of which could be teachers, budget documents show.
“We’ve looked at this (schools) budget from top to bottom. We don’t think there’s any fat in it,” said Martinsville School Board Chairman Bill Manning.
“This budget has been cut to the bone,” added school board member Carolyn McCraw.
Stroud recalled “contentious times” in the past between city and school officials over funding issues. He said, though, that the two sides have had “cordial, frank discussions” recently, and he expects that will continue.
The council also heard from officials with the Blue Ridge Regional Airport, Patrick Henry Community College and the Southside Business Technology Center, who thanked the council for the level funding proposed for their entities.
The city budget proposal contains $1,796,008 for agencies outside the city government that get funds from the council annually. That amount is just 0.7 percent more than what was allocated for them in the current budget year.