Minutes 03/30/2015 - Laserfiche WebLink

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March 30, 2015 Revenues As for the General Fund, one penny on the real estate tax rate generates $685,000. It is very important to note the City did not equalize the tax rate in prior years when assessed valuations fell, so that total real estate tax revenue could have remained constant. As a result, the City has not fully recovered financially from the impacts of the recession. In Fiscal Year 2009-2010, the City’s assessed valuation was almost $7.7 billion. In Fiscal Year 2014-2015, it was $7.2 billion, a drop of 6.5%. In order for the real estate tax rate to produce the same revenue today as it did in Fiscal Year 2009- 2010, the rate would need to be equalized to $1.31. The City will continue to face the challenge of limited revenue growth compared to expenditure demands. As stated earlier in this message, in order to provide a budget that is structurally balanced and which provides resources for the City’s top priorities, I am reluctantly recommending an increase in the real estate tax rate of 17 cents, which will bring the rate to $1.44. This is the same rate as it was in 2006. The City’s assessed values are not only low compared to Fiscal Year 2009-2010, but they are also low compared to surrounding localities. As of July 1, 2015, the average single family detached house in Portsmouth will have an assessed valuation of $151,430. The impact of the proposed tax increase on the average taxpayer living in a single family detached home will be $257 per year or $21 per month. The impact for the average townhome and condo is lower, at $16 per month. As noted above, this tax rate increase can be broken down into several drivers, the largest of which is related to the City’s Public School system:  Ten cents to permanently provide $6.4 million to the Portsmouth Public School System in support of quality education  Four cents to equalize tax rate to offset the consequences of the Great Recession of 2007-2008 and to restore tax revenues lost due that recession  One cent to continue investments in critical infrastructure and capital projects. As noted above, the City’s ongoing capital maintenance costs are almost $1.1 million each year. This amount funds replacement and repair of roofs, HVAC systems, traffic signals, bridges and other City infrastructure. There is a backlog of deferred maintenance in this area, and the ongoing funding needs are even greater than what has historically been allotted to these projects.  Two cents to offset flat revenue projections, and to provide for normal cost increases in the City’s budget As noted earlier in this message, certain fee increases are proposed for Inspections and Engineering services, in order to recover more of the costs associated with these services. In addition, ambulance fees are proposed to be indexed to 110% of the Medicare Allowable Rate, consistent with recommended practices. The fee proposals are detailed starting on page 3-16 of this proposed budget document. Again, this budget does not propose any increases in utility rates. Our cash situation is such in the Utility Fund that we are able to cash fund some capital projects that we had previously planned to debt finance. Again, we are able to balance the Utility Fund budget without increasing the water and sewer rates as originally forecasted. It will be necessary to propose utility rate increases in future budgets in order to fund ongoing costs and debt service associated with planned capital improvements in the water and sewer systems.