Finance plan says growth preferred over tax increases

By Robert Mihalek

Village Council will rely on residential and job growth, before pursuing tax increases, to bring in more revenue under a finance plan Council adopted last week.

The plan, which has been a goal of Council for the last two years, states that the Village should “emphasize population and job growth as principle means of increasing revenue.”

It also says that the Village should “minimize tax increases” by relying “first” on growth and adjustments to the utility rate structures. The plan reiterates a pledge Council members made in the past that any proposed tax increases would be approved by voters.

In addition, the finance plan calls for Council to build up the Village’s year-end reserves and find funds for capital improvement projects.

One goal in the plan is to “create projections” to reach within five years reserves of 25 percent of daily expenditures for the Village’s four main budget funds: general, or multi-fund, electric, water and wastewater. This means that each of the four funds would end each year with a balance equivalent to three months of its daily operational costs.

The plan also states that Council should create rate structures for the Village utilities that support daily operations and address the Village’s many capital improvement needs, while at the same time identify “different means of borrowing” funds to pay for capital projects.

Council unanimously agreed to adopt the five-year finance plan at its meeting on Sept. 19. Council president Tony Arnett said that the plan provides “guiding principles that will help future Councils.”

Council members have been working on the plan for nearly two years. The effort included the creation of an education brochure on the Village’s financial picture and two surveys aimed at gauging local residents’ support for strategies to raise revenue and cut costs.

During last week’s meeting, Arnett highlighted Council’s decision to survey the community as part of the finance plan, saying that the document has been “built not just on our best thinking and the administration’s best thinking, but on the will of the community.”

Over 80 percent of those who responded to the survey said that they favored population and job growth as a means of raising revenue for the Village. A large majority of respondents said they opposed raising taxes or utility fees.

“I’m way satisfied with what we’ve put on paper,” Council member Denise Swinger said.

The finance plan contains nine goals and six overarching “action plans” to achieve those goals.

For instance, to address capital improvement needs, the plan states that Council should “review and revise” the list of projects and cost estimates, including long-term costs of supporting replacement projects and upgrades in the plan. It also states that Council should identify “means of borrowing” funds and grant options to pay for capital projects, then project the impact borrowing funds would have on the Village budget over five years.

A five-year capital improvement plan, distributed earlier this year by former Village Manager Rob Hillard, identifies the following costs for projects from 2006 to 2009: $1,595,827 in the general fund; $681,000 in the electric fund; $788,416 for the water fund; and $812,416 in the sewer fund.

To reach the goal of having 25 percent yearly reserves for each of the Village’s four budgets, the finance plan states that Council should determine the impact growth could have on each fund and create five-year rate structures. If these methods won’t help each fund achieve the 25 percent balance goal, the plan says Council should determine which form of taxation would work best.

The plan calls for a proposal to work with a private company to deliver high-speed Internet access and “data connections” around town, through wireless technologies, running broadband cables over the Village power line or another means. The new service is seen as a new revenue source for the Village.

The plan says Council should determine the feasibility of creating a stormwater control utility. Last month, Assistant Village Planner Ed Amrhein suggested that Council consider instituting a user fee for the stormwater system, which could generate funds to upgrade the system around town.

In addition, the plan says Council should decide whether to maintain police dispatching in the Yellow Springs Police Department or contract it out; continue to sell Village assets “where appropriate and in the best long-term interest of the community”; review “cost recovery fees for new development and utility extension” and annually review the fees charged for the Gaunt Park Pool, the Bryan Community Center and zoning permits.

The finance plan calls for Council to project the impact on the Village should growth not meet projections, including identifying necessary changes in utility rate structures and changes in taxes.

In addition, in the plan Council says it will review and update the document, as well as a five-year capital improvement plan, at least every two years.

Along with the finance plan, Council also distributed at its meeting last week two scenarios showing what steps Council could take to achieve its goal of tackling capital projects and building up the fund reserves.

In both scenarios, the Village would rely on 3 percent annual population growth and 1 to 2 percent job growth; borrow funds to pay for capital projects, paying the debt off over 15 years; create a high-speed Internet access franchise and a stormwater utility, which would charge customers $5 a month; and raise electric rates by 1 percent a year and both water and sewer rates by 7 percent a year.

The scenarios differ in which taxes the Village would raise. In one, the Village would raise the income tax rate to 2 percent from its current rate of 1.5 and institute a new 5-mill, 15-year property tax levy for streets and the water and sewer departments.

The other scenario shows the Village instituting a new 4-mill, 15-year property tax for streets and the water and sewer departments and cutting the reciprocal tax credit by half.

The reciprocal tax credit is granted to Yellow Springs residents who work in other municipalities that charge an income tax. 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.

During last week’s meeting, Arnett said that under either scenario discussed by Council the general fund would not meet Council’s 25 percent reserve goal in 2010. He blamed it on a “gaping hole to take care of all these streets.”

The other three funds would meet the reserve goal, the budget scenarios show.

Contact: rmihalek@ysnews.com