Crestwood aldermen take no action on '06 budget, tax-rate hike proposal
December 21, 2005 - The Crestwood Board of Aldermen last week took no action on the city's 2006 budget nor Mayor Roy Robinson's proposal to place a 20-cent tax-rate increase on the April 4 ballot.
During a roughly five-hour meeting Dec. 13, aldermen delayed passage of the 2006 budget after Robinson said he wanted to remove $345,000 from the proposed capital improvements budget — $95,000 for a new police radio system and $250,000 for street maintenance. Based on recent sales-tax information, City Administrator Don Greer and aldermen also plan to review revenue projections for 2006.
Aldermen planned to further discuss the 2006 budget and Robinson's proposal for a tax-rate increase at a special meeting. At press time, however, the meeting had not been scheduled.
Robinson previously told the Call that he asked City Attorney Rob Golterman to draft the ordinance to place a 20-cent tax-rate increase before voters so the Board of Aldermen could begin discussing the issue.
If a 20-cent tax-rate increase is placed on the ballot and approved by voters, the city's residential tax rate would increase to 44.1 cents per $100 of assessed valuation, while the city's personal property tax rate would increase to 45 cents per $100 of assessed valuation. The city's commercial tax rate would increase to 46.3 cents per $100.
If approved by voters, a 20-cent tax-rate increase would generate roughly $540,000 annually for the city's general fund. A resident with a $150,000 home would pay an additional $57 in taxes to the city if a 20-cent tax-increase was approved.
A tax-rate increase is needed, according to Robinson, so the city can begin reducing the debt it has incurred.
The board voted 5-1 Nov. 1 to adopt an ordinance borrowing up to $3.5 million from Southwest Bank. Board President Tim Trueblood of Ward 2 was opposed. The $3.5 million the city is borrowing includes a $1.5 million line of credit and a $2 million promissory note. As collateral for the $3.5 million from Southwest Bank, the titles to City Hall and the city garage on Pardee Lane have been pledged.
Aldermen on several occasions have discussed placing a bond issue on the April 4 ballot, but have taken no action.
Proposition 1, which would have authorized the city to issue up to $6 million in general obligation bonds, was overwhelmingly defeated by voters last April.
During the Dec. 13 meeting, Robinson said that he had told Greer earlier that day that he wanted the $95,000 for the police radio system either eliminated or delayed.
"I'm under the firm belief that we can survive another year. So I'm going to ask the board tonight to do that and I'm going to ask them to reduce the street maintenance (by) $250,000,'' he said, noting that residents were told in the past that $500,000 would be sufficient annually for street maintenance. The proposed capital improvements budget projects $732,668 for street maintenance.
"Let's do what we said we were going to do previously and maybe the people will believe that we're serious about what we're doing,'' Robinson said, adding he initiated the proposal for a 20-cent tax-rate increase. "... We have to pay off that debt and there is no additional money without severely hurting this city to get it paid off.''
Twenty years ago, the city had a property tax rate of 44 cents per $100, the mayor said, noting that because of the success of the city's business community, that tax rate was reduced by the board.
"We do not have the business community that provides the funds that we had before. Now is the time when we're going to have to ask the people to offset this loss in revenue that we're not getting from the business community. It's not there, folks, and it seems like it's continually going down. We're trying to make cuts. You can only cut a city so much. So I swear to you, we've cut this place bare bone. The safety of our city is at stake if we cut any more ...,'' Robinson said, adding that after the previous week's snow, he received calls asking where the city's salt trucks were.
"The thing you've got to realize: We're down to the bare bones of who can drive the salt trucks now. So we cannot afford to — if we want to have safe streets, good streets, maintenance and all this, we cannot cut any more. We need a tax increase to get this city out of debt and my proposal is to offer this tax to the people and it can only be used to pay off the debt and establish a line of credit — period. It cannot be used to go buy new trucks, new communications systems or anything. It has to be used to pay off the debt ...,'' he said.
Ward 3 Alderman Jerry Miguel later raised concerns about the 2006 revenue projections, noting those projections were made in October. Based on subsequent collections, he said, "... Our revenue projections from October turn out to be about $115,000 on the high side. So if we're going to talk about adjustments to the budget, we really need to discuss the revenue side of the budget as well. We are down on a cash basis, our sales tax revenue's down 4.4 percent from a year ago ...''
Noting that Jan. 24 is the deadline to place a proposition on the April ballot, Trueblood said, "... I started talking about potential issues to go to the voters back in August and we are here tonight with one meeting scheduled before that deadline hits, and maybe that's what it takes that we get backed into a corner before we really, really respond. I agree with you, Alderman Miguel. I'm concerned about the projected revenues — not because they weren't made in good faith ... but because they are so unpredictable ... So what's the solution? These are all nice long sentences explaining a problem we've known about for a year, at least.
"We've had work sessions. We've had meetings. We've had discussions and we've had people, myself, bring to the citizens of this board the need to do something and it hasn't happened until tonight. So I'm a little bit amazed now as we sit here that we're at this point of concern,'' he continued. "The easiest thing to do, quite honestly, and it's the least tasteful — we've all talked about it — is cut from the services we have left and that's the safety services. That makes a big whack in that budget, but no one wants to do it on this board ... So I guess my question, considering that history and where we stand tonight with the clock running, what do you want to do? Are you willing to take a stand and make those cuts in another board meeting? I doubt it. We haven't in the past at work sessions. Why would we now?''
Earlier this year, aldermen approved by defeasance of $9.83 million in certificates of participation issued to fund a new police facility, eliminating annual debt service payments of $733,000.
Robinson said, "I don't think we're talking about making additional cuts. What we're talking about is cutting some of the fluff or at least that's what I'm getting — not the fluff, but the extras that were put into different items that were directly caused by the defeasance of the COPs bonds that the people who have been watching that feel that we have redirected them so that we're not even aware that they're in existence any more. And I think that's what concerns them.
"That's the reason I say if you want to do something tonight, we can delay the $95,000 for the — that was going to be spent on a new communication system. Let's look and see how we are in 2007 for the budget then and see if we can start then, but right now, that's a $95,000 savings that we can do tonight. And also, I still believe that we ought to cut the $250,000 that we've added on the street maintenance,'' he added.
Trueblood said, "I would agree with you that that would be appropriate, except for the issue Alderman Miguel brought up. And that is the inability for us to accurately project income from our sales tax revenue. I think if it was a steady flow of revenue based on a non-variable source of income, I would say you're absolutely correct. That would be sufficient and I would support that, but my concern is that as Alderman Miguel I think correctly pointed out, is that the reliability of the current revenue flows are just difficult to project ... We don't get the reports for this season until March, which makes it very difficult — but that's the state (that) holds it until March. It's not something that we can change.
"So I would agree with you, Mr. Mayor, except that I'm not sure that will be enough under those circumstances with the revenue not coming in at the rate that we project. That's my concern, sir ...,'' he added.
Robinson said, "Well, what I'm saying is it has nothing to do with projections. It has to do with the money that we were hopefully going to see this year in the capital improvements, which was $730,000 that we would be spending on the COPs ... Like I said before, we could use that — instead of just spending it because it's in the capital improvements, we could use that as a means to borrow from that fund in order to maybe not have to rely so much on our line of credit. And I believe that would be legal. So I mean I'm not an attorney, so I don't know whether it's legal or not, but would think it would be.''
Greer later said he believed the revenue projections should be revised based on information the city received the previous week.
"... It is my opinion that those revenue estimates should be reworked based upon the sales-tax information we got at the end of the week,'' he said. "I do think that's going to result in some rather significant issues. I don't know how to balance the park and stormwater fund, so I'm prepared to go back and take a look at these things, and I think what you'll see, if, in fact, that's the method that you prefer there are some rather drastic issues. But if you're prepared for that, then I'll put staff on it first thing in the morning. Actually, we've already started ...''
Trueblood later noted that if a tax-rate increase is placed on the ballot and approved, the city would not receive the revenue until late 2006 or January 2007.
In the meantime, Trueblood said, "... You're going to be drawing interest out during that time on the current line of credit, bridge note, all the money that we owe the bank, so that that first $540,000, if the voters approve it, may actually diminish by the amount of interest we've had to pay on the current notes ...''
A general obligation bond issue, is "the sufficient and efficient way of eliminating that bank debt,'' he said, adding, "... If you're not going to see this revenue for another year and we're going to continue to go during this year backwards — and we know that as we sit here right now, we know that — why not put forth the best proposition to solve the problem? Do away with it. Have a sunset on that GO bond ... To me, that's the way to do it. It's the cleanest way to do it.''
But Robinson said he doesn't believe voters would approve a bond issue.
"Well, I can just tell you this, I don't know how you're going to get 57 percent of the people to vote for it ... Based on my contact with the people, a 57 percent, asking that many people to vote for us is absolutely ludicrous,'' he said. "You might as well not put anything on the ballot ... If you want to try to do something to see if we can convince the people that we need to pay off this debt and it's not going to be used for anything else, then this is the only way I know that we can do that. So you can change the numbers on there. If you think it's more or less, I don't care. I just brought this up because the time is flittering away ...''
In a separate matter, aldermen voted to adopt a resolution "requesting Congress to adopt S520 and HR1070 and in so doing protect the ability of our city to display the Ten Commandments in public buildings and places in our city.'' Aldermen voted 6-0 to adopt the resolution with Ward 1 Alder-man Richard LaBore abstaining and Ward 3 Alderman Don Maddox absent.
The resolution states, "... (T)he U.S. Su-preme Court in two razor-thin majorities of 5-4, concluded that it is consistent with the First Amendment to display the Ten Com-mandments in an outdoor public square in Texas, but not on the courthouse walls of two counties in Kentucky ...''
The resolution states, "... (T)he Kentucky decision will be used by litigants who want to remove God from the public square in America. Sooner or later, this effort will take place in our states. Reports have indicated that it is now under way in at least 25 different places in America. Namely, to require the removal of the Ten Commandments from public buildings or public parks.''
Because "... S520 and HR1070 are statutes which will allow the display of the Ten Commandments in public places in America,'' the resolution urges Congress to adopt them.