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Council requests tax reduction
By Conner Hammett, chammett@acnpapers.com
Council members asked city staff Sunday to reduce the city’s tax rate by $0.001 after budget projections indicated little change in the city’s fund balance between 2010 and 2011.
The request, made at the city’s yearly budget retreat, would take the current tax rate of $.555 per $100 of property valuation down to $.554, taking an estimated $84,000 from the general fund to finance the reductions.
“We felt like in these difficult times, when families are having to cut back, this is our way of cutting back also and giving them some relief in their tax rate,” said Jeff McGregor, council member Place 6. “Albeit, it’s a small reduction, it is a reduction. We’re going to maintain our level of service without increasing our budget.”
The budget proposed by city staff earlier this year provided for no change in the current year’s general fund balance of $13.7 million, adopting a “hold the line” philosophy that would see no reduction or expansion of city services.
At the retreat, City Manager Peter Vargas told council members that staff was enabled to maintain a balanced budget by maintaining a prudent approach to expenditure funds.
“Even though we’ve had double-digit growth in [previous] years, we’ve always been very conservative in how we approach the budget and how we approach the services we’ve provided,” he said.
While the reductions would still leave the city with a lower general fund balance than that of last year, the reduction wouldn’t drastically reduce the ability of future budgets to help with unforeseen economic issues, Vargas said Tuesday.
“We project over a 3-5 year time period, so we see where we’re going to be,” he said. “I think at some point that’s going to catch up with us, but the council’s been very prudent in making sure that they provide the resources that we need for the work program we approve.”
Vargas said the tax reductions would not impact existing services.
Financial outlook
At the budget retreat, council members were briefed on the state of the local and national economy by finance director Kevin Hammeke.
Overall, the state of Allen’s economy was determined to be steady despite nationwide volatility, owing partially to the addition of 111,974 square feet of retail space in the city.
“Conservative budgeting has helped us during this downturn in the economy, as well as our growth in occupied retail square feet,” Hammeke said.
While the city’s existing property appraisals, which don’t include recent development, declined more than 2 percent, new properties accounted for 3.03 percent in valuation, leaving the city with a net increase of 0.99 percent. The lowered values amount to a decrease of approximately $828,900 in tax revenue.
Sales tax revenues were up 10.99 percent over last year’s figures and are expected to increase 6 percent in 2011.
While sales tax revenue from accommodation and food services went up 17 percent, wholesale trade and manufacturing fell at 34 and 42 percent, respectively.
“It’s not quite up as much as we expected, but it’s hitting our revised budget, so I think we’ll be OK there.”
Hammeke said while some of the increased sales tax revenue will stay in the general fund, much of it will go toward the city’s finance agreements with area retailers such as The Village at Allen and Allen Premium Outlets.
While expenditures are expected to be $14 million higher than those of the previous year because of the city’s new management role at the Allen Event Center, $11.6 million in additional revenue is expected to offset the additional costs.
The budget’s ending balance is expected to be $3 million less than that of the 2009-2010 budget.
City staff is currently working to amend the budget to reflect the council’s requested tax rate in time for the Aug. 24 city council meeting and public hearing. The council will approve a final budget at its regularly scheduled meeting Sept. 14.
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