10 percent sewer increase recommended for WWTP upgrades
Columbus Town Manager Jonathan Kanipe has proposed a budget for fiscal year 2011-12 with no tax increases and a 10 percent increase in sewer rates.
Columbus Town Council reviewed the initial proposal Tuesday, May 17.
The total budget is proposed at $2,187,575, with $862,840 in the general fund and $1,324,735 in the enterprise or water and sewer fund.
“Budget preparation for fiscal year 2011-2012 is once again done under an austere cloud due to the local, regional and national economies,” said Kanipe in his budget message. “While some revenues have bounced back, others remain below pre-2008 levels. The measures utilized by council and staff during last year’s budget process have thus far kept the town in good financial condition.”
The proposed 10 percent increase in sewer rates is intended to help pay for planned upgrades to the town’s wastewater treatment plant (WWTP).
The town projects keeping the current tax rate of 39 cents per $100 of valuation, although projections are for property tax revenue to decrease slightly from this year. The town’s total assessed property valuation this year is $122,000,000, which is projected to drop to $116,784,225 next year. Kanipe explained the decrease is due mainly to depreciation of business personal property and projected drops in real assessed value related to lots in the Chocolate Drop subdivision.
Taxes collected from property are expected to total $440,000.
The motor vehicle tax assessed value ratio is also projected to decrease by 10 percent next year at $5,287,775. Motor vehicle tax is projected to net $17,440 for the town next year.
Tax revenue from sales tax is projected to be the same as this year at $176,000.
No major capital improvements are proposed except preparing for $2,750,000 in WWTP plant upgrades that the town is planning to accomplish through a 20-year no-interest loan.
Next year’s budget proposal includes purchasing two new police vehicles, approved last week, and a new dump truck, but the town plans to finance those purchases with debt service not due until after the end of next fiscal year.
The budget also includes contingency in both the general and the enterprise funds. Council is considering using some of the funding for employee increases. Council members directed staff to look at a 4 percent cost-of-living increase for employees, with Kanipe including budget impacts for 2 percent, 3 percent and 4 percent increases.
There is $13,358 allocated in the general fund contingency and $67,129 allocated in the enterprise fund contingency. If council chooses a 2 percent COLA employee increase, it will cost $7,909 from the general fund and $6,304 from the enterprise fund. A 3 percent COLA increase would cost $11,769 from the general fund and $9,460 from the enterprise fund. A 4 percent COLA increase would cost $15,629 from the general fund and $12,612 from the enterprise fund.
“This increase would be effective July 1, 2011,” Kanipe said. “Again, the budget presented does not include these numbers, but per council’s request, you can see what they are and the impact they would have on our budget. Staff’s proposed budget is at a surplus, and we place-marked the savings in each fund in the contingency expense item. If council wishes to give the COLA increases this year, that surplus would be reduced by whatever amount COLA is chosen.”
Council can also make a decision on how much sewer and/or water rates should go up to pay for the WWTP upgrade loan. Kanipe has provided projected revenues for increases ranging from five to 15 percent in both the water and sewer funds and combinations of both water and sewer fund increases.
Last year, the town implemented a five percent increase in water and sewer rates.
Kanipe projects the town would increase its revenue by $33,585 with the projected 10 percent increase in just sewer rates. Raising only water rates would amount to a projected $38,093, and raising both 10 percent would amount to a projected $71,678.
A 15 percent increase would mean a projected $107,516 total increase in revenues ($57,139 from water and $50,378 from sewer). A five percent increase in water and sewer rates is projected to generate $33,450 more in revenue ($17,777 from water and $15,673 from sewer).
Per a recent recommendation by councilman Michael Gage, next year’s budget proposal also includes a $5,000 expense to pay for half of next year’s Fourth of July fireworks. The town decided last year not to include funding for the festival, after having spent approximately $32,000 the previous year on the festival.
The Fourth of July Committee has downsized the festival this year, funding it only with donations. The Polk County Board of Commissioners agreed to fund the remainder of firework costs this year. Columbus will take the $5,000 down payment, or about half the total cost for next year’s fireworks out of occupancy tax revenue. The town is expecting to receive $20,000 next year in occupancy tax funding.
Council is planning a budget work session to discuss the budget in detail as early as this week. The town will likely hold its budget public hearing during its June 16 meeting.
The town is required to approve the budget by June 30, with the new fiscal year beginning July 1.