November 18, 2004

How options in survey could affect community

By Robert Mihalek

Over the next two months, Yellow Springers will receive two documents from the Village relating to Village budgetary issues and Village Council’s effort to create a five-year sustainable budget.

The first of these documents is an eight-page educational brochure, prepared by Council, providing local residents an overview of the Village’s current financial position and options that have been identified to raise revenue and reduce costs. Village Manager Rob Hillard said the brochure would probably be distributed next week.

The second document is a survey the Village will distribute to all Yellow Springs households.

The Village will also conduct a similar phone survey with 309 households. The phone survey will start Nov. 24 and take three weeks to conduct, said David Jones, a research associate with Wright State University who has been working with the Village on the surveys. The mail questionnaire will be distributed after the phone survey is completed, he said. Wright State should be finished analyzing the results after the New Year, he said.

The survey questions reflect options Council has identified to reduce expenses or raise revenue. Council wants to gauge community support for these options. For instance, the survey asks Yellow Springers whether they would support raising income or property taxes or utility fees to pay for needed projects, or eliminating such services as channel 13, Mayor’s Court or Gaunt Park Pool.

Council members have said that they will use local residents’ answers to write a five-year financial plan. The plan will likely contain a mixture of the options identified in the survey. For the last several years, the Village has been creating budgets that show Village revenue is flat, while expenses, though kept in check, continue to rise. In addition, the Village is facing millions of dollars of capital improvement projects, though funding for the projects is not projected to keep pace with the cost of capital needs, especially when projected out over five years.

Over the next two weeks, the News will publish two articles providing an overview of the options listed in the survey and aiming to help readers better understand how these various strategies could affect the community.

The first article examines the options listed in the surveys that the Village has identified to generate more revenue. Next week’s article will focus on expenses and Village services included in the surveys.

• Increase utility fees to pay for projects specific to utilities.

Earlier this month, Hillard released a capital improvement inventory of projects identified by Village staff as priorities to be completed between 2005 and 2009. The inventory includes $1 million in projects for the electric system, $885,000 in water projects, and $892,000 in sewer projects. The inventory does not include revenue streams for these projects.

The draft 2005 Village budget, also released this month, shows that the utilities’ revenues will not keep pace with capital projects over a period of the next few years.

The Village could increase utility rates to produce funds for capital projects for the utilities. In an interview, Hillard said that raising utility rates is a “realistic way to pay for capital projects.” This type of approach was taken in the late 1990s to successfully generate income for capital projects for the Village water system.

However, the sewer system’s rates, which were implemented a few years ago, have not been generating the expected dollars to fund capital projects. This shortfall is blamed, at least in part, in a decrease in the amount of wastewater the Village treats. That amount has dropped by 10 million gallons since 2002, according to Troy Slone, who oversees the Village wastewater treatment plant. The Village plans to accelerate a sanitary sewer rate increase, originally scheduled for August 2005, this January.

According to the educational brochure prepared by Council, the Village’s water and sewer rates are among the top five most expensive in the area, though it does not define “area.” The brochure also states that the Village’s electric rates are competitive and “among the lowest in the area.”

• Increase income taxes to pay for infrastructure improvements.

Currently, the Village’s income tax rate is 1.5 percent, which Hillard called a “pretty standard” rate. The municipal income tax does not include the Yellow Springs school district’s 1 percent income tax.

The Village uses income taxes to pay for activities in the multi-fund, or general fund, which includes police, streets, parks, the mayor’s office, Council and Village administration — basically, most Village activities except the utilities. Income tax revenue represents almost 59 percent of the multi-fund’s total revenue in the draft 2005 budget. The Village projects that income taxes will remain stagnant, at $1,417,000, from 2005 through 2009.

According to information provided by Council member George Pitstick, based on 2002 financial data, the Village could increase income tax revenue by $226,000 a year by raising the income tax to 1.75 percent, and $446,000 if the tax is upped to 2 percent.

The five-year capital improvement inventory includes $2.2 million in identified capital improvement projects in the general fund. However, the 2005 draft budget, which includes projections through 2009, clearly shows that under its current revenue trends the Village would lack funding to pay for such a large number of capital projects.

“At this point, we’ve identified a lot of capital projects,” Hillard said, but general fund revenues “aren’t adequate.” He stressed that the Village must invest in aging infrastructure before capital needs become regular operational problems.

• Reduce or eliminate the reciprocal tax to pay for infrastructure repairs.

The reciprocal tax credit is applied to Yellow Springs residents who work in other municipalities where the income tax is the same as or higher than the Village’s 1.5 percent income tax rate. For instance, local residents who work in Dayton, where the income tax is 2.25 percent, do not pay income taxes to the Village, while all income taxes for Yellow Springers who work in Beavercreek, which does not have an income tax, go to the Village.

The Village could reduce or eliminate the reciprocal tax credit and, for instance, require that local residents working in Dayton pay additional income tax to the Village — as well as their current taxes to the city of Dayton.

According to Pitstick’s data, the Village could generate $158,000 a year in additional revenue by halving the reciprocal tax credit and $318,000 a year by eliminating the credit all together. The Village could receive even more revenue if it lowered the reciprocal tax credit and at the same time increased the income tax, Pitstick’s analysis shows.

• Increase revenue through job and residential growth by “expanding the borders” of Yellow Springs.

The educational brochure reports that Yellow Springs’ population has declined from 4,624 in 1970 to 3,761 in 2000, and that the number of jobs declined from approximately 2,200 in 1990 to less than 1,950 in 2000. The largest recent impact in the job market may have been Vernay Laboratories’ decision in 2002 to close its Dayton Street plants and move 185 jobs to the company’s plants in the South.

In the last few years, the Village has advocated business and residential growth in part to raise additional revenue for Village services, including the utilities. Village officials pushing for growth say that more people living or working in town means there are more people to share costs. For the last two years, Council has set as major goals both job and housing growth.

In the educational brochure, Council advocates expanding the borders of Yellow Springs “to create long-term sustained, slow growth.” The document also claims that “there are few larger pieces of land” in town “that could fit a larger number of homes — enough to create a few years of 1 percent housing growth,” noting that there are parcels not well suited for business growth.

Hillard said that the Village “would absolutely benefit from growth” through additional utility revenue.

According to an analysis prepared by Council president Tony Arnett, Yellow Springs could gain between 19 and 57 jobs a year, if it realizes 1 to 3 percent job growth annually. This rate of growth could generate between $164,000 and $492,000 in income taxes in the next three years for the Village, according to Arnett’s information. Over the same period, the electric system could gain between $88,000 and $265,000; the water system, $68,000 and $205,000; and the sewer system, $86,000 and $257,000, according to Arnett’s projections.

Arnett also projected how 1 and 3 percent population growth between 2005 and 2007 could affect the Village coffers. The Village could gain between $84,000 and $251,000 in income taxes, according to Arnett’s data. The electric system could generate $45,000 and $135,000; the water system, $35,000 and $104,000; and the sewer system, $44,000 and $131,000.

These numbers reflect steady growth over three years but do not account for any expenses the Village could incur because of growth. Hillard said that the Village utility system has the capacity to accommodate growth.

• Raise property taxes to pay for projects.

The Village expects to receive a total of $202,000 in real estate taxes next year, according to the 2005 budget, or 8 percent of the general fund’s total revenue. The majority of local property taxes go to the Yellow Springs school district. Property taxes here are among the top third in the area, the Village’s education brochure states.

Hillard said that there are “multiple ways” the Village could approach raising property taxes, if it chooses. For instance, property tax levies could be used to fund the parks system’s operations or dispatching services or other programs in the Police Department. Property taxes could even be used to fund the utilities, though Hillard said that is “not something I would promote.”

• Impose neighborhood assessments to pay for projects mainly benefiting certain neighborhoods.

Neighborhood, or special, assessments are levied on a specific area of town to fund a project. Special assessments are collected through property taxes.

Assessments are primarily used for property improvements, Hillard said. They can be used to pay for a number of projects, from road repairs to upgrading water or sewer lines, in a specific neighborhood. The Village has used special assessments in the past on sidewalks and to upgrade sewer lines, Hillard said. One downside to special assessments is that while the residents on a particular street may pay for repairs to their street, all Yellow Springers get to use and benefit from that improved road.

• Sell a portion of the Glass farm, which the Village owns.

Council plans to use Village green space funds to build a two-acre retention pond on the Glass Farm to control stormwater flooding on the northern end of town. The pond is estimated to cost $150,000 and is included in the draft 2005 budget.

At least two Council members have said that they would support selling remaining portions of the farm — not including the retention pond — to raise revenue for the Village. It is unclear right now how much of the farm could be used for development, nor is it definitive how Council would use the proceeds from the sale of parts of the farm. Hillard said that the Village’s profit would be dependent on market forces.

Council has taken a similar strategy by agreeing to sell the Village’s two rental properties on State Route 343. One house was sold this year for a $96,000 profit, and the proceeds were placed in the Village general fund. The other house has not yet been placed on the market.

• Charge Yellow Springers fees to use the Bryan Community Center.

Currently, local residents do not pay to use the Bryan Center’s meeting rooms and gym during regular business hours and noon to 5 p.m. on Saturdays. Nonresidents pay $30 an hour. Yellow Springers charging for classes or using the center during odd hours, such as after 8 p.m. weekdays, pay $15 an hour.

On the survey, Council asks respondents whether they would support charging Yellow Springers the same fee as nonresidents, or a reduced fee.

The draft budget projects $15,000 in Bryan Center fees. Additional revenue could pay for the building monitors who watch and clean the Bryan Center and answer questions.