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A Few Clouds City floats $90.4 million budget
Spending plan includes tax increases to cover rising costs and part of Superblock judgment
The city unveiled its proposed $90.4 million budget for the 2016-17 fiscal year at the May 3 City Council meeting. The plan includes a tax levy increase of nearly 4 percent, as well as a separate 4.3 percent tax surcharge, which would mean a combined tax increase of over 8 percent.
City officials concluded that keeping spending below the state tax cap was untenable in light of “unavoidable” increases, including a $20 million judgment the city must pay to two former owners of the Superblock property following a decades-old lawsuit. The surcharge, meanwhile, would cover the remainder of the judgment, after the administration paid $18 million of it with a borrowing measure and an escrow fund.
The council voted unanimously at the meeting to hold a public hearing on May 17 to discuss overriding the state tax cap*, which limits property tax increases to approximately 2 percent or the rate of inflation, whichever is lower. City Manager Jack Schnirman said that given the rate of inflation, the tax cap for the new fiscal year, beginning July 1, would be just .12 percent, or $42,000 in additional revenue for the city.
“While our expenses continue to go up, we see a cap on our revenues,” Schnirman said, adding that the city is grappling with $4.2 million in expense increases ranging from the Superblock judgment to contractual raises, health care and retirement costs. “That’s a challenge for anyone.”
Schnirman noted what he described as the city’s $23.9 million turnaround: four consecutive balanced budgets that adhered to the tax cap, and credit rating upgrades by Moody’s Investors Service since he took office in 2012 — a period during which, he said, officials had to deal with not only a staggering deficit and a depleted reserve fund left over by the previous administration, but also costs associated with Hurricane Sandy.
“We’ve come a long way as a city financially over the past four years, and now is a critical time for us,” Schnirman said, adding that the city’s fund balance has grown to $9.1 million since it was on the verge of bankruptcy in 2012. “We’re still not out of the woods, and we still have a lot of work to do in recovery … and our primary goal this year is to protect that progress going forward and make sure that we continue to make the difficult choices.”
