Sterling outlines likely tax increase: Revenue down, but pension payments must be made
STERLING – If the city wants to make its contributions to the police and fire pension fund, it must raise property taxes “a dime a day.”
The city plans to increase its property tax rate from $1.62 to about $1.76 per $100 of equalized assessed value. The actual rate won’t be known until property values are finalized in the spring.
That means the owner of an $80,000 home will pay $25 to $35 more a year in property taxes, depending on how many exemptions he receives.
“Broken down, that’s $3 a month,” Alderman Joe Martin said. “That comes to a dime a day [more].”
The City Council passed the preliminary levy Monday, but must hold a truth in taxation hearing before final approval, because the increase is 9.39 percent, and any increase of 5 percent or more requires a public hearing at which the need for the hike must be explained.
The hearing will be scheduled for early next month.
The increase is less than required to pump up a pension fund dinged by declining revenues and stock market losses. The city will make only $827,810 of the $992,919 it should pay.
To fully fund its pensions, the city would need to increase its property tax levy by 15 percent, which means the owner of an $80,000 house would have to pay $55 to $65 more in property taxes next year.
A 9 percent increase softens the blow, but it “will require further increases next year to reach our needs,” City Manager Scott Shumard said. “The penalty is higher payments in the future.”
It’s an even tougher situation than earlier this year, when the city laid off six firefighters until the union agreed to concessions in health care benefits, and to take furloughs. Still, the city cut $775,000 from this year’s budget.
Whether more cuts are coming remains to be seen. Those discussions won’t begin until next year, and in the meantime, the city needs to determine how much revenue to expect. More concrete estimates for state income and sales tax revenue is needed, for instance.
Shumard says they are likely, though.
“No matter the levy increase ... there will be significant budget cuts to come as our largest revenues have decreased too significantly to be made up by property taxes and we still face the pressures of increases health and liability insurance costs next year,” he said.
“The question at hand is how deep will the cuts to personnel and services have to be given the revenues generated.”
Alderman Skip Lee supports a 15 percent increase in property taxes, which also help fund city services.
“People want services, only 11 percent comes from property taxes,” Lee said. “Nobody likes taxes ... but the bottom line is if you want toilets to flush, fires to be put out, and the police to come to your door when there are problems in the backyard, it’s going to cost money.
“We’ve been running a lean machine. ... it’s unfortunate, now is the time it’s hitting people ... there are no free lunches,” he said.
Alderman Barry Cox voted against the tax hike: He wants no increase at all.
“I could understand that financing has not allowed for the proper percentages to come back ... but the people we all represent are having the same problems,” Cox said.
“These are tough times, I understand, but they’re tough times in our own billfolds, also. We can’t keep going to the citizens. People are losing their homes; it’s not good.”
