Though city finance officers and budget committee volunteers agreed the city’s budget should be in good shape for the next few years, the City Council on Monday directed city staff to start researching ways to increase revenue and secure other funding to help pay for what are expected to be significant facilities needs beyond that.
Among those related tasks is to determine local voter support for a parcel tax, and perhaps an increase in the city’s real property transfer tax, to generate some of that money. The parcel tax, in particular, could be an election ballot item as soon as March 2024.
For Deborah Leland, chairwoman of the city’s Budget Advisory and Financial Planning Committee, a warning about long-term prospects was deja vu.
“We are not adequately funding the city’s long-term needs,” Leland told the council Monday night. Paying for replacing or upgrading major city buildings and infrastructure, she said, is “more than we can fund with occasional surpluses.” It’s a message Leland has had for the council before, and a reality the council has consistently acknowledged.
Monday night, during the first of two planned 2023-24 budget hearings, Piedmont Finance Director Michael Szczech told the council the preliminary 2023-24 city budget calls for a 6.4% increase in General Fund revenues from the previous year, up from $35,651,366 to $37,928,132. While the budget anticipates a 1% drop in property-related tax revenue – by far the largest chunk, 68%, of the city’s General Fund – increases in most other areas more than make up for that tax-related shortfall.
Still, that drop in property-related tax revenue prompted discussion among council members. Of specific concern was the real property transfer tax, 1.3% of the amount of any given home or property sale. Szczech said Piedmont home sales have dropped significantly since 2021, a reflection of rising interest rates and high inflation that have weakened the area real estate market. As a result, Piedmont is budgeting $3.4 million in transfer tax income for 2023-24 – a conservative amount, significantly lower than in past years.
But Szczech told the council that transfer tax reduction isn’t going to seriously harm the 2023-24 budget. “I’m not losing sleep yet,” he said.
There is indeed more optimism in other parts of the city budget – the Recreation Department-related revenue is expected to go up about 7 percent in 2023-24, to $3.49 million, and small revenue increases are expected several areas, including building permits and planning fees, utility user taxes, franchise fees and business and sales tax revenue.
Revenues from “other agencies” is getting a major bump – on paper, at least – for 2023-24. The budgeted amount of $2.82 million is more than triple the 2022-2023 figure, thanks mostly to American Rescue Plan Act (COVID-19 stimulus) funds distributed to the city. That pot of money, $1.8 million, is formally considered revenue once it is spent.
Also on the spending side, Szczech noted city employee costs, including salaries, benefits and retirement costs, will go up a planned 6% in 2023-24. That reflects employee labor contracts signed in 2021 that call for 3.25% wage increases for most employees during the 2023-24 fiscal year.
In addition to funding long-term facility and infrastructure needs, the city is looking to hire one, and possibly two, new police dispatchers in the near future, who would eventually work in a new dispatch center to replace the current 1953 facility.
City Administrator Rosanna Bayon Moore said the City Council will receive an updated 2023-24 budget, incorporating changes discussed by council members, at the council’s Tuesday, June 20 meeting (instead of the usual Monday meeting night, in recognition of Juneteenth). That will be the second, and final, hearing for the 2023-24 Piedmont budget.
See the City Council packet report for the 2023-24 budget at https://tinyurl.com/2p93ex4t
Contact Sam Richards at firstname.lastname@example.org