Final budget lowers tax rate, creates housing reserve
When City Manager Suzanne Ludlow presented the proposed FY 17 City budget for Council consideration on April 6, she recommended keeping the real property tax rate at the same rate as the current year – 58.5 cents per $100 valuation. After multiple public hearings and Council budget work sessions, on May 18 the Council adopted a lower tax rate of 56.75 cents and also set aside $400,000 in a Housing Reserve Fund for advancing affordable housing initiatives in Takoma Park.
The tax rate was a major subject of the Council deliberations because property throughout the City was reassessed this year, which showed that property values had increased significantly since the last assessment three years ago. Although property assessments are phased in over a three-year period, keeping the tax rate the same would have still increased the amount property owners pay.
The City Manager was counting on increased tax revenue to pay the third year of a phased-in wage increase and the cost of a proposed environmental education/code position. These elements were retained in the final budget, although there was significant Council and public discussion about whether the new position should be approved.
The Council, in turn, was looking to put significant funding towards affordable housing and economic development initiatives. The Community Conversation on Affordable Housing showed there was strong community interest in taking steps to keep Takoma Park a community where people of different economic means can live in safe homes and apartments. And there is an understanding that without affirmative efforts to build a strong economic base in Takoma Park, the City won’t have the money to continue to offer the services the residents need and want.
Ultimately, several hundreds of thousands of dollars were set aside for both housing and economic development efforts, with specifics to be decided over the coming year. In addition monies for community partnerships were taken from the allocation for the community grants program to better meet the Council’s priorities for fostering youth success and assisting others in need of support.
According to Ludlow, the process of moving from a proposed budget to a final budget went relatively smoothly this year for several reasons:
- The Council established priorities in February that helped staff focus proposals and services and provided a simpler framework for the budget work sessions.
- The Council decided to bond for the City’s $1 million match for grant funding for the Ethan Allen Gateway improvements rather than to set aside cash, freeing up current year funds for other more immediate priorities.
- Mayor Stewart streamlined the reconciliation process by preparing several alternative groups of Council-proposed changes to help members consider the items as a package and see the relative impacts of the changes on the tax rate.
An overview of the proposed budget was in April’s Newsletter. The proposed budget, the budget presentations and the final budget are all on the City’s website on the Budget and Financial Documents page. Also on the website, Mayor Stewart has summarized the final budget in “The Dollars & Cents,” a post on the Mayor and Council Blog.
Highlights of the reconciliation changes to the budget are:
- A decrease in real property tax revenue of $367,471 by reducing the real property tax rate from 58.5 to 56.75 cents per $100 valuation
- Savings of $580,000 by bonding for street projects rather than paying $1 million for the Ethan Allen Gateway in FY17
- Postponement of the planned Community Survey, saving $35,000
- Adding $4,400 for two additional Play Days
- Opening the City’s MacLab to teens after school for $23,400
- Adding $100,000 for planned economic development efforts
- Adding $280,000 to the $120,000 for the exterior home repair program to establish a new Housing Reserve with an initial allocation of $400,000
- Establishment of a Scholarship fund with $5,000
- Adding $5,000 to the allocation for the Folk Festival
Other changes to the proposed budget included a savings of $100,000 in expected health insurance expenses, $50,000 for additional work needed for streetlights in Old Takoma and a reduction in expected property tax revenue of $200,000 from assessment challenges.
The FY 17 Budget becomes effective July 1, 2016 and will be in effect through June 30, 2017.
This article appeared in the July 2016 edition of the Takoma Park Newsletter. The Takoma Park Newsletter is available for download here.