Crestwood board may seek 15-cent tax-rate hike Aug. 2
May 25, 2005 - Crestwood Mayor Roy Robinson called a special session for the Board of Aldermen to consider placing a 15-cent tax-rate in-crease before voters in the Aug. 2 election.
As proposed, the tax-rate increase would generate $365,000 for police and firefighter pensions, which currently are covered by the general fund.
In effect, creating the tax for police and firefighter pensions could free up cash for the ailing general fund.
"The $365,000, that's exactly what it does," City Administrator Don Greer said at a Ways and Means Committee meeting last week. "You're letting a tax pay for a police and fire pension and that frees up $365,000 for the general fund."
"We are not borrowing money," Robinson said. "We are taking the money and the money will be used not to pay off the capital improvements or the parks and stormwater or anything else. It's to maintain the general fund and pay salaries or whatever ...
"The people don't want to pay anything extra, I realize, but they're going to have to realize the days of not increasing property taxes are over," he added.
Committee member and Ward 1 Alder-man Richard LaBore said the proposed tax-rate hike should have a sunset date, but legislation scheduled to be considered by the board Monday night — after the Call went to press — did not call for a sunset.
The proposal is far from a solution, Greer said. Crestwood still would be around $400,000 shy of fiscal stability.
To plug the hole, Robinson suggested an early retirement incentive program for employees.
If the proposed 15-cent tax-rate increase is placed on the ballot and approved by voters, homeowners with properties valued at $200,000 would pay an additional $57 per year. The city's current tax rate is 25 cents per $100 of assessed valuation.
The deadline to place a referendum on the August ballot was 5 p.m. Tuesday, two hours before the board's regularly scheduled meeting.
Robinson, LaBore and committee member and Ward 3 Alderman Don Maddox discussed the tax-rate increase proposal at a May 18 Ways and Means Committee meeting, voting to recommend placing the 15-cent tax-rate hike on the ballot.
"We need to present something to the board that is in sync with trying to create revenue in some manner that will keep us afloat the next couple years," Robinson said. "Something to stabilize, make sure we can maintain our services ...
"You're specifying for that (firefighter and police pensions), but all we're doing is opening up $365,000 for other uses is what we're doing," Robinson said. "What would be the difference of just saying: 'We need $400,000 to maintain services and it won't be used to pay off any other funds. It's going to be used to maintain services.'"
Greer agreed the city needed revenue, but emphasized that $365,000 will not keep the city afloat.
"You can't say we need $400,000 to maintain services. That would be incorrect," Greer said. "It is not the be-all-end-all. It is not the end of the road ... What is the public willing to embrace? This is not anywhere near enough.''
"What I'm thinking though," Robinson said, "is if the board would agree, we could do something like this for the $365,000, show the public that we're willing to reduce the amount of money that we're spending on the (City Hall) renovation, which would be if we could spend instead of $7.8 million, we could spend $4 (million) or $5 (million), four and a half (million), so we are able to defease (the certificates of participation) to show that we're making an effort — because the payout is $733,000 or $740,000 a year for the renovation. I think the people, knowing that it's going to take 700-some thousand dollars to maintain our services, if we show them, if we're willing to compromise, we don't have to look at laying people off and losing services.
"I've been out there and I don't think anybody in the city wants to reduce the level of services we have now," he continued. "What they want us to do is control our spending ... People do not think we ought to be borrowing to keep going.
"Once we stabilize and hopefully get these new businesses or new developments going, maybe Westfield (Shoppingtown Crest-wood) comes up and we hope they will, then five years down the road the board can be presented with the fact that we can reduce 5 or 10 cents on that (tax rate), but we need the money now to try to maintain services is what I'm trying to say," Robinson said.
"I think if the board continues to go with the renovation as it is, I don't think anybody can get that (tax rate passed)," he said.
"... The $365,000 would do it if we're willing to cut services and cut people," Robinson said. "And that's the part I don't like. I'd like to be able to maintain."
"I think everybody in this room would like to maintain services," Greer said. "But let's be realistic with regard to what our options are. We need revenue ... If we don't either reduce our expenses or increase our revenue, we won't be around in five years to be able to reduce the property tax. We're going to have to infuse the equivalent of $650,000 to $750,000, revenues or expenses either way, from the general fund in order to continue this way.
"And I'm not even addressing the line of credit," he added. "I'm just barely taking into account the fund balance of the general fund right now. That's our financial situation. The parks and stormwater fund is not going to balance. The capital improvements fund is not healthy, but I believe it's manageable. The general fund has a significant debt of the balance ...
"We are able to pay our bills today because of the line of credit," Greer said.
"If we continue to go with the renovation and the money we're paying out," Robin-son said, "we're also using this building as collateral for that money, so even after I'm gone and future boards are gone and these aldermen are off, we won't even own our own building. If something happens, we could lose our business here. I'm talking we got down to where we couldn't pay our bills. We lose our City Hall and everything."
"Can't pay our bills? We're not going to exist," Greer interjected.
Maddox and LaBore agreed the city needs revenue, but had reservations about asking voters for a tax-rate increase after April's bond proposal was heavily defeated.
"Property taxes are our only option," Mad-dox said. "Unfortunately, we didn't realize that until this year. My personal opinion is it's too early to ask them to vote again for a tax increase. (But) it's a stickler for No-vember or April next year, which means that any property tax income won't come in until January 2007."
At a Ward 3 Town Hall meeting before the April election, Maddox told the Call that voters should reject the bond issue and return to the voters in August for a property tax increase, though he has some reservations now.
"I'm sensitive too about going back too soon," LaBore said. "It was only six weeks ago, but I'm not sure I have a good grasp on why they voted the way they did last time. It could be political. It could be personality issues. There's too many scenarios."
Robinson said, "If we don't do anything by next Tuesday, then you're going to wait a whole another year (for new revenue) and then most definitely we're going to have to look at cutting staff and cutting people throughout the city.
If the voters approve the tax this time, officials still would need to trim the city's budget.
To shore up about $250,000, Robinson suggested a two-year early retirement plan that would increase the salary multiplier from 1.5 percent to 2 percent, meaning higher pensions. The board was scheduled to consider this matter Tuesday night.
Greer said 18 employees would be eligible, mainly police and firefighter positions, and some of those positions may not be refilled. But if everyone took the bait at the same time, the savings could be lost and city services could suffer.
"If everybody retires tomorrow, then it's a problem," Greer said. "The only way to make a gain is to lose as few people as possible. So how much more can we re-duce our operating expenses through again through attrition through either hiring people at a lower wage or not replacing certain positions and restructuring what we're doing?"
"At what point do you not function with equivalent services when losing that many people?" LaBore asked. "How much can we realistically save if six or seven people retire? Is it worth it?"
"Yes," Greer said. "I think it is for the city because again we're accomplishing two things remember: We're downsizing without having to lay off; younger people are going to work. You're really taking a big portion of your top layer out ...
"The sooner you implement something like this, the sooner you start saving," he said.
"Now that can be dangerous too if you don't pay attention to exactly what effect it has," Greer added. "Let's say you have six fire captains. Well, what if four of them are eligible (to retire)? I don't want to be in a place where you only have two fire captains."