Published: November 03, 2009 12:18 am      

Aldermen again stress cuts

DANVILLE — Ward 6 Alderman Steve Nichols said again his fear with this year’s tax levy and budget is that the city will only put a Band-Aid on the city’s financial problems when a tourniquet is needed.

“We pick some group to raise taxes on each year,” he said.

He said the city could again end up with a hodgepodge of cuts and a few revenue increases.

“The utility tax is the dream tax. It goes up each year,” Nichols admitted, but added that now is a bad time to implement it.

He suggested aldermen look at “sweeping” all reserves from the solid waste and other budgets to look at all the funding the city has now.

Mayor Scott Eisenhauer and Comptroller Gayle Brandon, however, cautioned against that due to large equipment purchases in the future and cash flow issues.

Only half of the city council members attended Monday night’s second tax levy/budget study session.

Those absent were DeMarko Wright, Rick Strebing, Bill Gilbert, Terry Baldwin, Sharon McMahon, Ron Candido, Steve Foster, and Dale Brandenburg for part of the meeting.

Aldermen have largely agreed to increase the rental registration fee from $10 to $100 (with a cap of $500 or $1,000) which will raise an additional $300,000 a year.

Also, some aldermen favor a utility tax or a sales tax increase.

Under a scenario of keeping the city’s $1.88 property tax rate the same for the 2009 levy aldermen will approve next month, this would include abating a large portion of the city’s bond and interest payments, increasing sales tax by 1 percent and implementing 2.5 natural gas and water utility taxes and a 10 percent of the maximum rate on an electric utility tax.

The approximately $3 million that would be generated also would allow a first year boost of $980,000 in the general fund reserve and then $750,000 each of the next two years for an infrastructure fund to save for matching money for the Fairchild Subway replacement and other larger projects in the future, such as bridge repairs.

Some example bills showed a homeowner paying about $88 more a year with the utility taxes.

Aldermen will talk further about how a utility tax will affect businesses at tonight’s city council meeting. That is the main concern among aldermen.

“We have a hard enough time competing (for) and getting industries …,” Ward 5 Alderman Jerry Askren said.

The utility companies would collect the tax for the city, but would add a small administrative fee, Mayor Scott Eisenhauer said.

Ward 6 Alderman Jon Cooper said most people he knows pay $3,000 to $4,000 a year in property taxes, and they don’t want to pay more. It’s unfair that other homeowners only pay around $700 a year, he added.

“If we can go another direction, that’s what I pick,” he said speaking against another property tax increase.

Aldermen who favor a sales tax increase, making sure the city still is equal to Champaign, say that all persons coming into the community then help pay for roads, etc.

But Nichols added that raising revenue will hurt the poorer residents, and send the wrong message to city employees and the unions.

“If you raise taxes $3 million, you’re not going to get anything,” he said of higher health care premiums and other concessions.

Nichols said there will be no pressure for departments to reduce costs. If the city takes more money from the public, it can’t say it’s broke.

Ward 1 Alderman Rickey Williams Jr. questioned whether the David S. Palmer Arena shouldn’t receive less hotel/motel and liquor tax revenue. The money could instead go to parks, for example.

“It should be a self-sustaining agency,” Williams said.

Williams said city budget cuts still have to be made.

He wants Eisenhauer to distribute job descriptions for all 250 employees. More job cuts will save in salaries and pension costs, he said.

But Eisenhauer frustratingly told him and the other aldermen that the city’s cut more than 30 jobs in the last few years.

“I’m frustrated the public doesn’t see the cuts we’ve made,” Eisenhauer said.

He said the city has cut as much as it can. Aldermen now must eliminate police, fire, streets, parks or code enforcement from the general fund to make any large budget impacts, he said.

He presented aldermen will these goal scenarios:

-- Increase revenues/eliminate services to balance the 2010/2011 budget ($1.7 million needed).

-- Abate bond and interest sufficient to assure the property tax rate doesn’t exceed $1.90 ($1 million needed).

-- Establish policy/build general fund reserve ($1 million in transfers/revenue).

Aldermen also Monday discussed how the city’s self-funded health insurance plan works. City officials in the spring will look at changing deductibles and co-pays and institute a pharmacy card to lower city costs.