The Ottumwa Courier

Local News

January 24, 2013

City ‘skins the cat’ in budget cuts

Property taxes to increase slightly, streets to be prioritized

OTTUMWA — The city is doing more with less, councilmen and department heads say, but services will remain the same, and street repairs will continue.

While the city’s portion of the property tax rate is dropping by 3.6 cents next fiscal year, taxable property valuation from the state is increasing 1.23 percent, said Councilman Brian Morgan, “which we have absolutely nothing to do with.”

The City Council discussed the proposed fiscal year 2013-14 budget at their work session Wednesday night.

This means the average residential property owner will see an approximate 1 percent increase in the city portion of their property tax bill. The city only makes up 45 percent of a resident’s property tax, though; the remaining 55 percent comes from the county and schools.

The city will receive nearly $12.9 million in property tax revenue in fiscal year 2014, which will constitute 24 percent of its expected total revenue of more than $53 million.

“We are up here trying to do the best we can to cut things where we can do it at,” Morgan said. “All you see in the end is, ‘You raised my property taxes.’ No, technically we lowered them.”

Mayor Frank Flanders said the state is “really good at making local government look like the bad guy.”

But starting on Jan. 1, 2016, 10 percent of Ottumwa’s Local Option Sales Tax (LOST) will go toward property tax relief.

The proposed budget includes nearly $67.4 million in expenditures, 33 percent of which will go toward capital projects,  and 25 percent of which will go toward business activities.

Out of the estimated $13.7 million gross expenditure from the general fund in fiscal year 2014, 46 percent will go toward police and 36 percent will go toward fire, since the two entities are not considered “revenue-generating” entities.

The tax levy has been reduced to 20.3 cents in fiscal year 2014, and Finance Director Bob Jay said the city needs to try to keep that rate level so the debt service doesn’t increase again.

“We’re trying to do the best we can without any gigantic increases,” Jay said. “We’ve cut things and maintained flat spending levels. We’ve skinned the cat.”

Councilman J.R. Richards hoped department heads could find a way to cut around $125,000 out of the budget.

Jay said any cuts would have to come out of the general fund, but “there isn’t a lot we can pull out of there without affecting service.”

Councilman Jeremy Weller said two years ago the City Council went through the budget and got rid of a lot of waste and some over-budgeting.

“Now we’re getting into the meat if we start cutting $125,000,” Weller said. “We’re either dropping projects or employees.”

By 2016 and 2017, Jay said the city won’t have to borrow as much in the debt service or for sewer projects.

“After that we’ll be able to cash flow everything else that comes through here,” he said.

There’s light at the end of the tunnel, Weller said, and it’s not too far away.

“We’re right at the cusp,” Morgan said.

Flanders said he was happy to see that citizens’ top concern — street repair — was priority No. 1 in the upcoming budget.

“We’re giving them what they want,” Flanders said. “It’s the start of a trend where we are going to have streets fixed.”

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