Rules of the Road

The purpose of this blog is to share with you my thoughts on issues pertaining to Oil City and Venango County and to foster discussion.

However, that requires some basic rules. Personal attacks, inappropriate language and venom-filled postings will not be tolerated. Comments will be screened, and if necessary edited, before posting.

Disagreement and a variety of opinions are encouraged, but I ask that it always be in a respectful, positive manner. So fire away, but do so cleanly

Sunday, November 29, 2009

The 2010 Budget -- Take 1

I suspect everyone is acquainted with the budget/tax issue facing the city.

On first reading, the 2010 budget required a 1.5-mill increase in property taxes, which was approved on a 4-1 vote. That amounts to an increase of $72 a year for the owner of the average residential property in the city.

(The median residential property value in the city is $48,000. Each mill is one-tenth of a cent. To find how much a 1.5- mill real estate tax increase would come to on any specific property, multiply the assessed value by .0015.)

The 2010 budget-buster is an increase of about 34 percent, or roughly $250,000, in health insurance premiums. The city is also seeing a slight drop in revenues from both real estate taxes due to a decline is assessment value and from the Local Services Tax, the $52 charged everyone who works in the city.

The proposed 2010 budget as given initial approval does nothing more than marginally maintain the current level of city services and activities. The 1.5-increase in real estate taxes balanced it on first reading as is required by law.

Everyone on council found the budget and tax increase troubling. And I can tell you with certainty that no one on council relishes the prospect of a tax increase. First of all it affects each of us just as it does every other property owner and to a person we have a deep understanding of the financial difficulties faced by many of our citizens. Secondly, I’m reasonably sure no one on council looks forward to the anger and criticism that will be directed at them if there is a tax increase.

I suspect each of us has different thoughts and approaches to dealing with the budget challenge. We will need to find a consensus, or at least a majority will.

It is easy to say “cut costs,” but it is much harder laying out a reasoned and successful way to do that.

My best guess is we might have some success in doing a bit of paring here and there and with the help of the city’s workforce be able to reduce our expenditures a bit and the amount of any tax increase, but unless we significantly reduce services there is no option but a tax increase. Already many of the long-term needs of the city are not being met, with street paving high on that list.

People live in the city for the services and amenities we offer – certainly I do. But as Councilman Neil McElwee pointed out our real estate tax rates can make us less competitive in attracting new residents and businesses. It is the space between the rock and the hard place.

Furthermore, I think we owe it to our new city manager to provide him a “status quo” budget and operations so that he can fully evaluate how we are doing things and come up with his own long-term strategic recommendations. Moving rashly now to cut costs would now fully allow him that opportunity.

Although I’m personally committed to maintaining our services and amenities, that does not mean I’m opposed to finding ways to do that more efficiently and less expensively.

Unfortunately, our financial inability to undertake major capital investments makes it that much harder. If we had a lot of capital money, there are quite a few things that could be done to improve efficiencies and lower long-term operating costs.

Beneath all our local budget woes, which are identical to cities across the state, are structural issues that can only be addressed by the state legislature. I don’t expect that to happen anytime soon.