The Town Commission won’t have to increase the millage rate after all.
In fact, the town tax rate will most likely fall.
Town Manager Bruce St. Denis will distribute a recommended budget for fiscal year 2009-10 at the end of this week that suggests a millage rate of 1.4934 mills, lower than the current town tax rate of 1.5 mills.
“Based on Town Commission direction, we plan to deliver a budget that lowers, or, at least maintains the current millage rate,” St. Denis said.
That’s a far cry from the preliminary budget, which included a $498,740 deficit and called for the commissioners to raise the tax rate at least 6.4% to 1.5967 mills.
A few weeks ago, St. Denis urged the commission to adopt a maximum millage rate of 1.6750 mills, which would generate the same amount of tax revenues as last year.
But five of the seven commissioners rejected St. Denis’ suggestion, and a maximum millage rate of 1.6 mills was set July 6.
But several of the commissioners warned town staff they didn’t want to see the current tax rate of 1.5 mills raised at all.
That wish came true when Finance Director Tom Kelley announced this week that he discovered a way to pay the town’s six street-department employees in the Public Works Department by using gas tax monies that are located in the town’s road-and-bridge fund.
The town’s road-and-bridge fund currently has a net balance of $2.73 million and is expected to have at least $2.96 million in the fund by the end of the fiscal year Sept. 30.
The fund, previously used to pay for capital improvement road projects, can also be used to pay for employees who work on town roads.
By using the gas tax money to pay those employees’ salaries instead of ad valorem revenues, Kelley said the move erases $363,000 of the revised $478,000 fiscal year 2009-10 budget deficit.
“Clearly, this helped us get to the lower millage rate that the commissioners requested,” Kelley said.
Reducing the town’s travel-and-training budget by $56,000, making some early-out retirement modifications and performing a department reorganization, wiped the rest of the deficit clean, Kelley said.
Kelley also said the town tried to eliminate every line item as much as possible.
The recommended budget, also includes the addition of another code enforcement officer at a cost of $56,000.
If the Town Commission chooses to hold the tax rate at 1.5 mills, Kelley estimates a 2009-10 fiscal year surplus of $34,000. If the lower millage rate of 1.4934 mills is chosen, Kelley said the budget would be balanced.
If a lower millage rate is adopted, the town would not be raising the tax rate for island residents like it did last year.
To further erase the shortfall, town administration worked earlier this summer to produce early-retirement options for employees that are estimated to save the town $152,500, cut health-insurance costs by $85,000 and worker’s compensation costs by $130,000 and eliminate $330,000 worth of employee cost-of-living and wage increases.
That’s a reversal from last year’s 2008-09 premilnary budget, which called for personnel costs to remain flat and included payroll-grade increases totaling $184,091.
According to a rough draft of the recommended budget, St. Denis also recommends designating a certain amount of the town’s millage rate to future principal payments for the town’s unfunded-pension liability, if the commission wants to eventually eliminate the plans.
The budget will be discussed on first reading and public hearing at 7 p.m. during the Monday, Sept. 14 regular commission meeting.
The budget will be adopted on second reading at a special meeting at 5:01 p.m. Monday, Sept. 28.
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