Gainesville residents may pay higher taxes next year as city officials consider raising the tax millage rate to maintain services and increase pay for city workers.
Gainesville City Manager Kip Padgett presented his recommended fiscal year 2013 budget on Thursday at the Gainesville City Council work session. The recommended budget will be the starting point for the budget process, with City Council getting the final say.
The $28 million general fund budget proposal — a 2 percent increase from the fiscal year 2012 budget — recommends a roll-up of the millage rate to cover the projected 7 percent decrease in the tax digest.
Millage rate is the multiplier to determine what a property owner pays in taxes, with 1 mill equaling $1 for every $1,000 of taxable value.
The projected decline in property values follows a 9 percent decrease in property tax revenues from the previous year. City officials also say increases in fuel and electricity costs are putting constraints on the budget.
A millage roll-up adjusts the property tax rate to a point where the city collects the same amount from the previous year.
“It’s meant to be revenue neutral based on total assessed value,” Padgett said.
Although the roll-up moves the millage rate up, it is not legally considered a tax increase since the total revenue remains the same.
Based on current estimates, a roll-up would increase 0.08 mills for the general fund tax, 0.04 mills for Parks and Recreation and 0.02 mills for debt service.
However, Padgett said those numbers could move up or down depending on final digest numbers expected in August.
While City Council had some questions about how the roll-up would work, none spoke against it on Thursday.
“I support it 100 percent,” Mayor Danny Dunagan told The Times. “We have no choice if we’re going to meet our obligations.”
Dunagan said Gainesville residents have come to expect a certain level of service, and the roll-up is necessary to continue that level.
Shortly after the release of the proposal, Gainesville resident Melissa Crowder sent a letter to City Council against the roll-up.
Crowder said she, like most residents, hasn’t seen a raise in years and is finding it hard enough to deal with other price increases.
She wrote, “I would urge (City Council) to look to any other avenue than your constituents for the funds necessary to fill the deficit projected by lower tax revenues.”
Crowder continued, “I understand the tax increase in the proposed 2013 budget is a tax roll-up, and a roll-up is not technically considered an increase. To me, this is just semantics, however. At the end of the day, I am being asked to pay more then I was the previous year. With my home already underwater with our mortgage due to the number of foreclosures in our neighborhood, paying higher taxes while our value declines is a hard pill to swallow.”
Property taxes make up about 19 percent of revenues for the city’s general fund. Sales taxes are projected to account for 19 percent.
Other revenue sources include franchise fees, business permits and fines and forfeitures, among other things.
The recommended budget also includes a 3 percent cost-of-living increase for city employees.
“Our people are one of our greatest assets, and they are our ambassadors to the public,” Padgett wrote in a memo to City Council.
He said the 3 percent pay increase would help the city retain its quality employees, many of whom received training by the city. City employees haven’t seen a pay raise in four years. However, they did receive a one-time $1,000 bonus at the end of 2011.
“We’ve got some very, very good employees, and we want to keep them,” Dunagan said. “It’s expensive to train new employees, and we think it’s justified.”
City Councilman George Wangemann praised the efforts of Padgett and city staff in constructing the budget, which he called a “balanced” approach.
City Council will hold public hearings June 5 on the fiscal year 2013 budget, and a final vote is expected June 19.