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Lower taxes would drain city funds
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Will a 19-cent property tax decrease cause a long-term financial shortfall for the city of McMinnville? When committees met to review departmental budgets Tuesday night, they were warned that it will.
According to the projected numbers by city administrator David Rutherford, the city will regress financially back into a cash-flow problem if it continues with plans to lower the tax rate.
“As you are looking at these budgets, I need you to pay close attention to the three-year plan,” Rutherford said to the board.
According to his projections, a 19-cent reduction in taxes will cause a slow reduction in the city’s fund balance over the next three years.
According to Rutherford’s projections, the fund balance will be $4.3 million in 2012, $2.8 million in 2013, $1.7 million in 2014, and $411,330 in 2015.
“If you look closely at the 2014-15 fiscal year ending balance, there will only be $411,330 to begin the next fiscal year,” said Rutherford. “That’s unacceptable in government. The city must have a fund balance of at least $2 million to begin the year.”
While the city’s ending balance will slowly decrease, the cost of continuing to provide services to city residents will rise in most departments.
Departmental budgets for fiscal year 2012-13 were approved in committee Tuesday.
Those departmental budgets are as follows:
• Police — $3 million
• Fire — $2.2 million
• Planning and Zoning — $290,810
• Public Works — $1.1 million
• Vehicle Maintenance — $272,411
• Animal Control — $73,487
• Parks and Recreation — $1.8 million
• Urban Landscape — $192,705
Departments that are state funded or enterprise systems, which means they are not dependent on property tax revenue, were also accepted. They included the Drug Fund at $54,600; Street Aid at $326,793; Solid Waste Collection and Disposal at $1.5 million; and Water and Wastewater at $4.5 million.
The overall budget, including the 19-cent property tax decrease and funding requests from nonprofit organizations, will be presented to the Finance Committee for its consideration. That meeting is scheduled for July 10 at 5:30 p.m.