No Layoffs, Millage Increase in Proposed City Budget

When they approved the budget for this current fiscal year, New Port Richey city leaders resorted to laying off staff and raising the millage rate and some utility fees.

City staff members are aiming to avoid a repeat performance when the City Council, which now has two new members, considers the budget for the upcoming fiscal year, which starts Oct. 1.

Staff crafted their proposed budget for the upcoming fiscal year with the goal of not calling for layoffs, raising the city millage rate, imposing new taxes on residents or reducing services, according to a memo from Interim City Manager Susan Dillinger and Finance Director Doug Haag that was released last week.

They also wanted to find funds for staff raises and special city projects.

The proposed general fund budget, which funds most city services, is $17.1 million, 3.3 percent higher than the current year’s budget. The overall proposed budget for the city is $50.3 million, 14 percent higher than the current budget of $44 million.

Staff are not proposing layoffs, but they’re also pointing out there’s no money in the proposed budget for restoring positions cut in the past or creating new ones.

The memo attributes the higher budget to higher operating costs, increased transfers of $2.3 million and $3 million in new capital projects.

Staff Propose same Millage, But Problems Persist

The city’s current millage rate is 9.577 mills per $1,000. Staff is proposing the millage rate remain the same for the upcoming year.  In accounting, one mill equals $1 for every $1,000 of taxable property value.

It looks like decreased property values continue to be a drag on city finances. The city is expected to have $163,000 less in tax revenues in the upcoming year thanks due to the decline in values. That’s a 4 percent drop in value, meaning the city can expect $4.37 million in property taxes to use in the budget.

The city went on a buying spree in the middle of last decade that landed it with several real estate properties, like the Hacienda Hotel and First Baptist Church site. It has failed to unload those properties or redevelop them.

Now, its Community Redevelopment Agency doesn’t have the money to make debt service payments in the upcoming year. The CRA also has to contend with a $350,000 decrease in revenues from tax increment financing.

So, staff is proposing using a $1.35 million subsidy to pay the department’s debt this year.  That subsidy comprises $1 million in Penny for Pasco funds and $350,000 in debt service reserves.

Because of concerns about limited for Penny for Pasco funds, staff is proposing delaying several city projects until new Penny funds become available in 2015.

It also has to contend with a state-mandated increase in the city’s contribution to the retirement plans of staff on the Florida Retirement System, increased insurance premiums. Its red light camera program is projected to bring in 40 percent less in revenue than it was projected to bring in this year.
At last accounting, the red light program was far below its revenue goal for this year. Deputy Mayor Bill Phillips has said he wants to see what it would take to exit the program.

Staff has some ideas for generating money or reducing costs, although some ideas may not pay off immediately. It is proposing creating a garbage hauler franchise fee and increasing permitting fees. It’s also proposing a cost recovery program for employee take-home vehicles. It's also proposing creating an impound lot that will be a wash in its first year but could generate revenue in the future.

It also plans to aggressively market its properties, look for ways to consolidate services and save money on pensions for police and fire rescue workers.

The City Council takes its first look at the budget July 11.

How do you think the city should become financially sustainable?