WATERLOO — The city kicked off its annual budget process in much better shape than usual.
A preliminary budget presented Monday during a City Council work session showed just a 1.3 percent increase in tax collections but a cut in the property tax rate.
Chief Financial Officer Michelle Weidner said the “base level” spending plan designed as a starting point for this year’s budget includes negotiated wage increases and a reduction in health insurance costs based on negotiated labor contracts.
It does not include any new programs, cuts in staff or changes in revenues, which will be debated in future meetings.
Mayor Quentin Hart said he was hoping to get the council members’ and public’s ideas early enough so they can be vetted before the planned March 9 public hearing on the budget for the fiscal year starting July 1.
“I want to take a look at what folks have,” Hart said. “You may have some ideas or some ways to generate revenue we didn’t think of.
“I want to have all of that stuff to try to massage it together and make sure we at least try to put together something that represents the council’s thoughts,” he added.
Last year the initial budget called for an additional $2 million in property taxes, which would have boosted the tax rate from $17.76 to $18.43 per $1,000 of taxable value. The council eventually lowered the rate to $17.61.
The starting point this year calls for a $523,000 increase in property taxes, which would drop the tax rate from $17.61 to $17.52 per $1,000. New property values from a change in the rollback on existing homes and new construction allow the rate to fall while overall revenues grow.
Based on the proposed change in tax rates, residential property owners would see an increase in the city’s share of their tax bills of less than 1 percent. Commercial and industrial property owners would see a 1.3 percent cut and apartment buildings would enjoy a nearly 10 percent reduction.
Council members are planning to hold work sessions Feb. 8 and Feb. 11 for departments to present their budgets and discuss possible changes in programs.
Several issues will require council attention, including a decision on the fund balance. Last year’s budget used $500,000 in cash reserves to lower the tax asking, so the city would need to find a similar amount of cuts or revenues to avoid using that same amount this year.
Weidner said the council also must decide whether to keep a firefighter position that is funded with a federal grant that expires next October.
Weidner noted she’s already heard comments from the public questioning why the city always talks about police and firefighter staffing at budget time.
“The reason it seems that way is just because they are such a large part of the property tax funded budget,” she said. “It’s very difficult to make meaningful changes to our levy rate without somehow affecting something in public safety.”
About $11.81 of the proposed $17.52 tax rate is earmarked for public safety.
Meanwhile, the proposed budget anticipates $1.7 million in “backfill” revenue the state has promised to cover business tax breaks provided the past two years. Some fear the state will cut that award to cover its own budget shortfalls.
“If that goes away, that’s a pretty large hole to fill for us,” Weidner said.