Utility Tax Must Stay Despite Lean Budget

There is no end in sight for the city’s unpopular 11% utility tax.

That’s the message City Manager Keith Till delivered to council members this week who approved a bare-bones $12.2-million spending plan for the 1996-97 fiscal year.

The new budget provides only partial funding for legally required reserve accounts. Only $300,000 will be set aside for the city’s liability fund, for example, which Till said should contain a minimum $900,000 to cover potential claims or judgments made against the city.

Other underfunded areas include the city’s capital improvement program, water and sewer system repairs and compensated employee absences.

“We looked long and hard at ways to be able to at least reduce the utility user’s tax,” Till said. “Facing these deficiencies . . . we can’t really, in good conscience, recommend any elimination or reduction of an existing revenue source.”

The City Council more than doubled the utility tax in 1993 to help close a $1.7-million budget shortfall, but vowed to review the levy each year. It is the county’s highest utility tax, but excludes water and cable television charges.

The tax was raised after years of dramatic budget cuts, including a 22% reduction in city staff. Some city officials had proposed turning over operation of local beaches to the state and contracting with the county for police services. But both ideas were rejected in favor of the higher tax.

The new “precariously balanced” budget calls for no reductions in city services, Till said. And the city will be partially funding reserve accounts and a five-year capital improvement program which went unfunded during the current fiscal year.

“It’s really depressing,” Mayor Gwen Forsythe said. “I wish there were more dollars available to do fun stuff in the city.”