After hearing presentations by City Manager, Mark Whitfield, City Financial Director, Lou Vitola and department heads of the FY2021-22 budget last week, Milford City Council held a workshop on May 24 to discuss the proposal, which totals $47.7 million, an 8.43 percent increase from FY2020-21. The proposal also includes a potential 14.13 percent tax increase as well as a possible rate increase for solid waste.
Much of the budget increase was due to personnel with several departments asking for new positions to be funded while others are seeking to fill vacant positions. There was no significant wage increase included, although Brad Dennehy, Director of Parks and Recreation, included a slight increase for casual-seasonal lawncare employees who are only making $10 per hour, making it difficult to get staff.
Mike Svaby, Director of Public Works, explained that with more people working from home as well as closures that kept people home over the past year, solid waste expenses have increased by nine percent. In addition, because of the way solid waste is funded, Vitola, reported that there were no reserves, suggesting that a rate increase could help build reserves and create solvency in the solid waste department.
At the May 24 workshop, Whitfield presented three questions to the council, asking them if it was still their desire to fund the five additional police officers using General Fund Reserves approved in 2017, how long they wanted to continue funding them with reserves, pointing out that fewer capital improvements would be completed the longer reserves were used to fund the officers. He also asked if council agreed that the city should phase out the use of Realty Transfer Tax (RTT) to fund the police, holding those funds for capital projects. Finally, he asked if council agreed with the funding requests for each department as they were proposed. In addition, Mayor Archie Campbell asked council if they were comfortable with the 6.5 cent tax increase.
“No, an increase of that size right after asking for an increase for the police station is a mistake,” Councilman Todd Culotta said. “We can make an argument that we have not raised taxes since 2007 and that is valid, but I think it could be done with one or two cents each year in order to get ourselves out of the need for RTT and reserves. We can do this in conjunction with cuts across the board, not necessarily in public safety, but across the board where other departments can tighten their belt a bit.”
Councilman Doug Morrow concurred with Councilman Culotta, stating that he felt funding the five officers was critical.
“I think we need to look at that, however, as we never really even got five officers,” Councilman Morrow said. “I was always told that RTT was for public safety. I would like to continue to use that for police. I understand there is risk in doing that, but that can be changed as we go along. I don’t like phasing it out for one thing and substituting for something else. I also think the 6.5 cent tax increase needs to be phased in over time. About a dozen years ago, we tried to do a one or two cent a year increase, but it didn’t fly. We tend to increase at least a nickel every time and that is just not fair to our taxpayers, especially hitting them in a few years with the police station.”
Councilman Andy Fulton felt that public safety should be viewed as a “sacred cow” when it came to budget purposes considering what is going on in the world.
“I realize that is a big piece of the pie, but if that pie ever goes bad, no one will want to live in Milford,” Councilman Fulton said. “As we look farther down to RTT, I think we can continue to use that fund for the police. Now, when I say that about protecting public safety, I do think we can look at other departments to see where we can make some reductions. Not 10 percent across the board, but maybe ask if they can look at the budget and trim three to five percent. As for a tax increase on top of the police station, it is clear people wanted the police station, they voted for that, so they supported that. But I am sure they did not want a huge tax increase on top of that. We need to take an incremental approach to that, small amounts over time and not a big chunk at once.”
Councilwoman Katrina Wilson was disappointed that after expressing a strong need for a new police station earlier this year, that council may now be asked to go to the public and ask for a tax increase. She explained that she was not comfortable increasing taxes the same year that the public approved higher taxes for the new building.
“I was there in 2017 when we talked about the five officers which, as Mr. Fulton said, we never even got five because of other reasons,” Councilwoman Katrina Wilson said. “I just don’t agree with an increase at this time. I also think RTT should stay in place. Even though it is predictable, we know it is there. About cutting costs, my first thought is about the Public Works Department which I always felt was a little top-heavy. Do you need a supervisor to manage three to five people? Could we combine those jobs somehow?”
Councilman Dan Marabello pointed out that the increase, once the new police station tax began, would be more like a 16-cent increase if the bonds were on the high end. He does believe that it is time to phase out using RTT to fund the police force but noticed looking at annual reports that the city always seems to come in under budget.
“We keep kicking the RTT can down the road and I think if we had phased this out years ago, we would not have needed to borrow for the police station,” Councilman Marabello said. “We need to cut back on the departments because they are always over estimating expenses and underestimating revenue. Maybe as the tax for the police station phases out, we increase based on that, so it doesn’t impact people so much. No one wants to say it, but the fact is we are eventually going to have to increase taxes.”
Councilman Brian Baer also felt that it was time to begin phasing out the use of RTT funds for the police force. He stated that Milford did not want to be in a position where there were not enough police officers to patrol.
“I think funding levels need to be looked at and I have no problem at all with departments reviewing the budget to see what they can reduce,” Councilman Baer said. “This may help us down the road lower our tax increases as well.”
Councilman Jason James, who heads the finance committee for the city, echoed the sentiments of other council members, reiterating the need for additional police officers. He did believe that the city needed to wean itself from using RTT funds as the use was not what was intended when the fund was created and because it is not structurally sound.
“When we started this budget process, I said let’s look at how efficient we can be and I think what Lou presented was good, with headcounts, increases and decreases clearly presented,” Councilman James said. “I am looking for efficiency. I also believe that cost never goes down, it only goes up. We need a path that gives us a tax structure that will keep up with inflation if nothing else, then we have to ask the citizens what their wants and needs are. All of those things cost money. Councilman Marabella said it perfectly. We have to explain to the public how a tax increase benefits them, but we also cannot do it all at once. I think they want to see enhancements in the parks, but they don’t want it all at once. We need to figure out a way to get there and create this year’s budget to be a launching pad for years moving forward.”
Mayor Archie Campbell stated that he believed new homes being built should cover the cost of additional police officers. He does see the benefit to phasing out RTT but thinks it should be done gradually. Mayor Campbell pointed out that statistics show as the population grows in a community, crime increases which is why the RTT fund should somewhat support the police.
“We also have to remember that the school district is going to go out for referendum and, if it passes, that will be an increase as well,” Mayor Campbell said. “People who just moved here know the schools are overcrowded and many are okay with taxes going up each year as they did where they came from. They will be okay with approving the school referendum.”
Vitola pointed out that there was a wider population of school district voters than those who live in the city as the district also covers areas like Ellendale, Lincoln and Houston where the residents don’t pay taxes in the City of Milford.
“City tax is just a small portion of the property tax bill,” Vitola said. “The increase will actually represent just a small increase. Adding less than a hundred dollars to a property bill that is $2200 or more, most people will not even notice the increase”
Councilman Fulton took exception with the statement, explaining that there were a lot of people in Milford on a fixed income and that $100 could mean cutting pills in half so they can afford their extra property taxes. Vitola stated that council could offer abatement for those who may not be able to afford the increase, explaining that tax abatement was a policy tool open to council.
“We very much appreciate your input,” Whitfield said. “Lou and I will go back and see what adjustments we can make. I want to point out that a reduction in expenses, even three to five percent, any money that is leftover goes into reserves. In essence, you are cutting the reserves you are using to pay the police officers and could deplete reserves if estimates are lower than expected when it comes to revenue or higher in expenses. The RTT is controlled by the state and they determine what percentage the city gets. Depending on something that is a whim of the state is something that keeps Lou and myself up at night. We have not discussed the retention of employees or wages. We are having a difficult time getting employees because it comes down to wages. We are in the process of doing a wage and compensation study, so we have an unknown there and are in negotiations with the police union. While we can make cuts, there are quite a few unknowns that I wanted to make you aware of.”
Council will discuss the budget again at a future meeting before voting on the final version.
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