City budget is at a crossroads

Headed into the final stages of the 2010-11 budget, the Plano City Council conducted a daylong work session at City Hall on Saturday and left multiple taxing options up for consideration.

The council was offered three options by the city staff to balance the budget, all of which raised taxes. Option one would be to go with the initially recommended city manager's budget increase of 1.49 cents to 50.35. Option two would raise the tax to the effective tax rate of 52.17 cents. Option three would take advantage of one-time city windfalls and only increase the tax by .5 cents.

The options drew questions from the council, which then reassured citizens in attendance it is doing everything possible to not raise taxes unnecessarily during an economic downturn.

"I think Tom [Muehlenbeck, Plano city manager] came up with a great plan with the half-cent raise," said Kevin Anderson, spokesman for the Plano Tea Party. Members from the fiscally minded group showed up wearing yellow shirts and holding "No New Taxes" signs as a message to the council.

Anderson said he understands the difficulty there is when it comes to a city budget during hard economic times. Because Plano still has a lower tax rate than surrounding cities, he said he realizes it is hard to argue against a tax increase to meet debt service needs.

"It makes the argument against this increase tough; except for the time, the timing is just not right," he said. "Unfortunately, [bond decisions] were made during the good times; now times are not so good."

With those citizen considerations in mind, the council members went to work on the budget options. After identifying a general fund deficit of $15.4 million for the 2010-11 budget and an $11 million deficit for 2011-12, the city has been hard at work making as many cuts as possible to help balance the budget.

Muehlenbeck said the deficit has occurred because the city has for too long paid for debt services out of the operations and maintenance portion of the budget in an effort to keep the taxes low. Now, as property values drop, they are no longer generating the revenue to continue transferring money in that manner.

In order to pay those debt services, the city staff has asked the council to consider three options to raise taxes that would meet the $17.51 debt rate.

Option one was the original recommended budget increase of 1.49 cents. This option would create $1.5 million in surplus that would go to lower the deficit in the 2011-12 budget.

The second option would raise the rate to the effective tax rate of 52.03 cents, which is 1.61 cents higher than option one, a total increase of 3.17 cents. The effective tax rate is the rate at which the city pulls in the same revenue it did the year before at current decreased property values.

This still leaves the city 3 cents short of matching the full tax rate increase needed to begin solely covering debt services. The effective tax rate was voted on as the top limit the council could raise taxes to without having to post for public input. Raising taxes over the recommended rate is a hard choice, but one Place 5 Councilman Harry LaRosiliere said the city and citizens must prepare to face.

"Whether we choose .5 cents, .9 cents or 1.49 cents - that are all necessary but not sufficient for what we as a city need on a long-term basis," he said. "There are going to be significant service cuts if we are choosing to ignore the reality that our city is at a crossroads from a revenue standpoint."

The increase to the effective tax rate would leave the city $4.1 million over a balanced budget which would go into next year's deficit budget.

The third option would be for a straight balancing of the budget. Because of recent increases in sales tax revenue of more than $500,000, one-time money for electric franchise fees and serious cuts from the city in personnel and services, all that is needed to break even on the budget is an increase of .5 cents. This would also cause the deficit in the 2011-12 budget to increase to more than $13 million.

Lissa Smith, Place 6 councilwoman, said in these economic times when citizens are hurting in the checkbook, putting little strain on them is important for the council to remember.

"I think at this point we have a federal government with a tax-and-spend policy. A legislature going into session and we don't know what the outcome will be. A health care system whose implementation we don't know where that is going to go. We had PISD raise their rate as well," she said. "We have citizens sitting at their kitchen table every night wondering how they are going to pay their bills, and to say it is only a $14 increase is insensitive."

The council did not decide on which option they would choose but were urged by Muehlenbeck to do so quickly so the city staff could plan accordingly. The Aug. 23 council meeting is the last one before the council must vote on the finalized budget at the Sept. 13 meeting.

Current Rating: 4 of 1 votes!

Rate File: Select Rating: * ** *** ****

 Plano Apartments
 Plano Attorneys
 Plano Auto Dealers
 Plano Auto Parts
 Plano Auto Repair
 Plano Beauty Salons
 Plano Car Rental
 Plano Dentists
 Plano Doctors
 Plano Flowers
 Plano Hotels
 Plano Insurance
 Plano Loans
 Plano Mortgages
 Plano Movers
 Plano Pizza
 Plano Realtors
 Plano Restaurants
 Plano Storage
 Plano Tax Preparation
 Plano Travel
 Featured
 More...