Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
Toll Free: 800-234-6575
Rate hikes on the table
For city's budget
Thursday, April 22, 2010
By MICKEY POWELL - Bulletin Staff Writer
Martinsville residents and utility customers would pay more for water and electricity in fiscal 2011, which starts July 1, under a budget proposal that includes no tax increases yet strives to make up for revenue shortfalls.
The budget proposal includes $5,826,394 in local funds for the city schools. That amount is $612,857 less than the schools received for the current fiscal year and $1.1 million less than they requested for fiscal 2011.
City Manager Clarence Monday presented the $60.8 million spending plan to Martinsville City Council on Wednesday. Council members did not comment on it. Instead, they scheduled work sessions in May to discuss it in depth.
Under the proposed budget, homes and businesses in the city are to pay 17.3 percent more for water, while those outside Martinsville who receive water from the city will pay 2.6 percent more.
That means city customers using 4,000 gallons of water per month - the minimum amount reflected on bills - would see their bills increase by $2.92, from $16.89 to $19.81. Those using 5,000 gallons per month - considered to be the average residential customer - would see their bills rise by $3.39, from $19.61 to $23, the budget proposal shows.
Water customers outside the city limits who use 4,000 gallons per month would see their bills increase by 66 cents, from $25.34 to $26. Those who use 5,000 gallons per month would see their bills go up by 76 cents, from $29.41 to $30.17, the proposal indicates.
The outside rate is not proposed for a larger increase so city rates will stay competitive with Henry County Public Service Authority (PSA) rates and "we won't lose customers" in the county, Monday said.
City electric customers, regardless of whether they live in Martinsville, would see an increase of $6.80, from $98.80 to $105.60, per 1,000 kilowatt hours, the proposal shows.
Combining water and electricity increases, an average city household would pay $10.19 more for utility services per month under the budget proposal.
Monday said the city must charge more for water to make up for revenue lost about two years ago when Henry County stopped buying city water to supply areas along U.S. 58 and U.S. 220, as well as to pay higher expenses, such as for electricity and chemicals needed to treat water.
He said the city has absorbed increases in wholesale electricity costs since 2008 but now a rate hike is needed "to recover our actual cost of power."
Without the proposed increase, the city would see a revenue loss of about $1.16 million, he said.
There was no discussion among council members of the proposed water and electricity rate hikes.
"I know we have citizens who are struggling," Monday said. But if the rates are not raised, the city will have to take money from essential services such as the police and fire departments to support the utilities, he said.
"We've got to get some revenue from somewhere," he said. "We don't have the ability to print money."�
Neither was there discussion of the local funding for schools. Scott Kizner, superintendent of the city schools, did not attend the council meeting. Two other school system administrators attended but made no comments.
According to Monday, expenditures requested by city departments for the coming fiscal year exceeded anticipated revenues by $4.8 million.
"To be almost $5 million short on money is a bad situation," Monday said.
As a result, "some very tough decisions (about city spending) had to be made," he told the council.
He blamed the budget deficit on various factors. They include a $1.5 million decline in local tax revenues, reduced state funding, decreased use of power by city customers and higher costs for getting wholesale power that the city purchases to Martinsville over lines owned by various electric utilities.
Monday said the latter has "nothing to do" with American Municipal Power, from which the city buys much of its wholesale electricity.
Factors also include the loss of water revenue from the county, a decline in Martinsville's population and the recession that started in 2008, he said.
Monday said he did not recommend a tax increase because as much as 30 percent of the city's population is jobless, a large number of older residents are on fixed incomes and current tax rates already are nearing or exceeding those of cities of similar size to Martinsville.
Earlier this month, the city cut 12 jobs to reduces its recurring expenses by $667,036. In the coming fiscal year, the city proposes to require each of its remaining 230 employees to take four furlough days, a move anticipated to save another $142,000, the budget proposal shows.
How the unpaid leave will be administered has not yet been determined.
Other money-saving measures included in the proposed budget are cutting council members' pay by 5 percent, keeping employee travel and continuing education expenses at a minimum and limiting capital projects to a few that were determined to be vital to city operations.
City employees will not be receiving pay hikes or bonuses in fiscal 2011, Monday said.
Most allocations to outside agencies that receive city funds are proposed to be reduced by up to 10 percent. However, exceptions were made for those that would lose mandatory state and federal funds if their local funds were to be reduced, the budget proposal shows.
The city anticipates having about $12.5 million in reserve funds when the current fiscal year ends June 30. About $425,000 in reserve funds will be used to balance the budget proposal, Monday said.
He indicated that the city should not rely on reserve funds more heavily to help fund its fiscal 2011 expenses. City expenses average about $7 million per month, he said, so the reserve funds are needed to maintain cash flow in months when lesser amounts of revenue are received.
When money is taken from the reserve to pay monthly bills, it is replaced when revenue is received, officials have said.
To generate revenue, the proposed budget calls for the city to sell various vacant tracts it owns. The total assessed value of the land is $160,300, but only $75,000 has been budgeted from land sales.
Monday said he doubts all of the land can be sold in a year.
The $60.8 million budget proposal is about $1.1 million below the current fiscal year's budget, Monday estimated. Except for the local school funding, the city budget proposal does not reflect school expenses.
In March, the Martinsville School Board adopted a $21.3 million budget for fiscal 2011.
The council set public hearings on the city budget proposal for May 25 and June 8. Budget work sessions were set for May 13, 17, 19 and 24.
Monday encouraged the council to wait at least a couple of weeks before it begins having work sessions "so the shock will wear off and you can go at it (scrutinizing the budget proposal) with a clear mind."�
He noted that any major changes to the proposal likely will require making other spending cuts, finding more ways to generate revenue and/or dipping further into the reserve funds.