WATERLOO — Major differences between Mayor Quentin Hart and a majority of his City Council have left the city without a budget for the coming year.
Waterloo now faces the prospect of failing to adopt a budget and tax rate by the March 15 deadline required by state law.
That would force the city to keep its current level of tax collection in the fiscal year starting July 1, prompting significant cuts to city services due to higher personnel costs and lost revenue sources.
“You’re going to be pushing $1.5 million to $2 million that has to be cut,” said Chief Financial Officer Michelle Weidner. “There will be significant curtailment of services. There’ll have to be.”
Hart said there’s no way to avoid cutting numerous city staff positions, and it will be impossible to avoid reducing police and fire service levels given those departments represent more than 80 percent of the city’s general fund operating budget.
“If that is the level of service that council would like to see, the majority, then it has to be honored,” Hart said. “Folks need to say exactly what they want to see gone, and then you have to answer to the public for it.”
Earlier this week Hart proposed a spending plan that would have kept total tax collection flat, raised the tax rate from $17.60 to $17.76 per $1,000 of value, and — due to a change in how residential property is taxed — resulted in a 1.4 percent cut in homeowner tax bills.
Council members Steve Schmitt, Bruce Jacobs, Chris Shimp and Margaret Klein voted against that proposal Thursday because it included a half-percent increase in the city’s current 3 percent gas and electric utility franchise fee, failed to reduce the tax rate and projected more state tax replacement revenue than pending legislation would provide.
Councilman Pat Morrissey joined them in voting against Hart’s budget because it left two firefighter positions vacant.
Klein, Schmitt, Jacobs and Shimp then approved a budget calling for the tax rate to fall to $17.17 and eliminating the $450,000 additional revenue from the franchise fee increase and another $450,000 in state property tax replacement revenue.
Klein and Jacobs said the franchise fee was a “regressive tax” that would hurt the city’s ability to grow.
Morrissey, Sharon Juon and Jerome Amos Jr. voted against that proposal, which would have forced the city to slash nearly $2.8 million from its budget next year.
Hart promptly vetoed the adopted budget, saying the deep cuts would “impede the city of Waterloo from adequately providing the level of services necessary and deserved for the citizens of Waterloo.”
He said being stuck with the current year’s budget, which still raises the tax rate to about $17.74, was better than the cuts prompted by the budget the council members approved.
Morrissey offered a proposal to maintain public safety, lower the tax rate to $17.40 and dig deeper into city reserve funds. But he continued to support the franchise fee increase and added a 5 percent fee hike for every general fund fee the city collects.
That proposal was rejected 4-3 along the same voting lines.
Council members continued to debate taxes and budget philosophies as the meeting stretched into its fourth hour. They adjourned after it was apparent no compromise was available.
“It is a philosophical difference; it’s just that simple,” said Schmitt, noting he believed the public elected the current council to start cutting taxes.
“This council is the council that’s going to make changes in how we do business,” he said. “I believe and I think other people believe this is how systemic change is done, and I think that’s what we’re going to do.”