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City considers real estate tax change
Garbage collection fee hike also proposed
Friday, April 12, 2013
By MICKEY POWELL - Bulletin Staff Writer
A higher real estate tax rate proposed for the new fiscal year to offset lower assessments could cause some Martinsville property owners to see higher tax bills.
However, everyone whose trash is collected by the city would pay more for that service under a fiscal 2014 budget proposal presented to Martinsville City Council on Thursday.
The new fiscal year will start July 1.
Both the real estate tax rate hike and garbage collection fee increases are needed due to city financial constraints, said City Manager Leon Towarnicki.
Revenues remain “relatively flat” while costs for fuel, insurance, materials, equipment and supplies are rising, he said.
The proposed budget also increases local funds to the city schools, gives city employees pay raises and funds the hiring of three new employees.
Towarnicki said preparing the budget proposal involved the same challenge that city officials had in preparing budgets for recent fiscal years: “Balancing the need to provide a level of services that citizens deserve and expect with revenue that doesn’t match the cost of providing those services.”
Under the proposal, the real estate tax rate would jump from $1.01816 to $1.0621 — almost 4.4 cents — per $100 of assessed property value.
As a result, the tax bill for a home assessed at $100,000 would increase by $43.94, from $1,018.16 to $1,062.10.
But the rate increase does not necessarily mean that real estate owners would pay more in taxes.
A recent citywide reassessment resulted in an average decline in real estate values of 4.14 percent, which would result in the city losing about $260,000 in tax revenue, according to Towarnicki.
The proposed “equalization” rate hike would let the city basically continue collecting the same amount of real estate tax revenue it is getting now.
Under state law, an increase in a tax rate is not considered a tax increase unless the locality sees its revenue increase by 1 percent or more.
Whether residents and businesses receive higher tax bills would depend on whether their properties dropped in value, said Martinsville Commissioner of the Revenue Ruth Easley.
If their property values declined, depending on how much the decline was, their bills might drop, Easley said. But if their property values remained the same or increased, they would receive higher bills, she said.
The vehicle tax rate is to stay at $2.30 per $100 of assessed value, and the rate for manufacturing machinery and tools is to stay at $1.85 per $100.
No water, sewer or electric rate hikes are proposed.
The spending plan increases the monthly residential garbage collection fee from $16.25 to $18.50 and the fee for emptying large, business-type trash containers from $24.50 to $26 each time one is emptied.
Businesses without those large containers would pay twice the residential rate for twice-weekly garbage collection, the budget proposal shows.
Towarnicki noted that trash collection fees have not increased since 2009. He said the proposed increases help cover rising costs for disposing of trash and maintaining the former city landfill site according to environmental laws, as well as help pay for replacing some worn-out collection equipment.
The budget proposal includes $6,013,985 for the schools, which is a 5.5 percent increase from the $5.7 million they received for the current fiscal year. But it is less than the slightly more than $6.36 million they sought.
Pam Heath, superintendent of the city schools, said after the meeting that she appreciates the proposed increase. She declined further comment.
Funds to hire three new employees — an assistant city manager, a budget analyst/assistant finance director and an automotive mechanic — are in the budget proposal, as is a 3 percent cost-of-living raise for employees.
The budget proposal includes the use of $906,080 from reserve funds to balance it. That would reduce the reserve to slightly less than $10 million, according to Vice Mayor Gene Teague.
Councilman Danny Turner asked how long it had been since the city spent less in a fiscal year than it collected in revenues.
Budgets from at least the past few years have been balanced with reserve funds, according to Towarnicki and city Finance Director Linda Conover.
Yet in some of those years, the city ended up with revenues exceeding expenses because it did not spend as much as was budgeted, Teague said.
When budgeting, the city tries to underestimate revenues and overestimate expenses, officials have said.
Immediately after Towarnicki finished the budget presentation, Turner started listing changes he wants to see made to it.
Among those changes, Turner said the assistant city manager job should be removed, but he did not say why. He also indicated that the city should give the Martinsville-Henry County Economic Development Corp. less funds.
The business and industry recruiting organization is proposed to receive the same amount it got for the current fiscal year, $279,500.
Mayor Kim Adkins told Turner it is not appropriate to expect Towarnicki to start changing the proposed budget right after he presents it, and council members need time to examine it in detail before considering cuts.
Other council members indicated they agreed with Adkins.
Teague added that “we’ve got some really capable people in the city (government) who work hard” to make sure funds are spent wisely.
Work sessions will be scheduled for the council to ask questions about the proposed budget before a public hearing is scheduled.