The consensus among the Gainesville City Council is that the proposed 2016 fiscal year budget, unveiled by City Manager Kip Padgett on Thursday, is in good shape.
The $30.7 million general fund spending plan includes no property tax increases, no major service cuts, and includes debt payments, plus $800,000 for employee salary and merit increases.
Moreover, no reserve funds are being used for one-time operating expenses, only capital purchases.
“One of the things that stand out in my mind is stability,” said Councilman George Wangemann.
The allure of stability, however, can be deceiving.
Looming on the city’s financial horizon are seemingly uncontainable health care costs, and tax increases or service cuts are likely byproducts.
“It is the truth that we as the citizens of Gainesville must learn to accept the fact that if we are not willing to bring in (new) income, then we must face the reality that services may have to be cut in certain areas,” said Councilwoman Myrtle Figueras.
The city’s health care claims have grown to $6.858 million from $3.617 million in 2011 fiscal year.
“Health insurance is a concern,” said Mayor Danny Dunagan, and not just for government, he added, but for businesses, nonprofits and individuals, too.
Total employee benefits, including health, life, vision, dental and disability insurance, will cost an estimated $10.1 million in the next fiscal year, up from about $9.3 million this year.
And Padgett said he expects health insurance premiums to rise in January 2016, though the city may pick up the majority, or possibly all, of the increase.
This may not be the case for long, however.
“The employees may have to sacrifice some,” through premiums, deductibles or co-pays, Dunagan said.
It’s not just rising medical insurance costs that threaten the city’s financial health. Paying off debt and post-employment benefits are also challenges.
“Operating budgets over the past years have been cut, even as the city has absorbed increases in health insurance, increases in utility costs and increase in other third-party items the city needs to perform its business,” Padgett wrote in a budget memo to the City Council. “This has all been accomplished while maintaining acceptable service levels.”
But it’s an unsustainable trend, Padgett added. Property values are showing only incremental increases, while the cost of providing city services continues to grow.
The city’s general obligation debt entering is currently about $18.8 million, and includes payments owed on the
Frances Meadows Aquatic Center, downtown parking deck and lease payments on the city’s jail after the Corrections Corp. of America vacated the facility a few years ago.
About $2.3 million is budgeted to pay down debt in the next fiscal year. But that’s just a start.
“Going forward, the city will have to utilize existing debt service funds and general fund monies to meet this debt obligation,” Padgett wrote. “Without new or increased revenue streams, the use of existing revenue could place a significant strain on current resources … There will be a need in the near future for increases in revenue or discussions regarding service levels.”
Dunagan said everything is on the table at this point, though he prefers not to upend the property tax rate to make ends meet.
“The last thing I want to do is raise taxes,” he added. “I think we as Americans are taxed enough. So we’ve got to make some hard decisions …”