After years of deep cuts, Mayor Chris Beutler said his budget for the 2014-2016 biennium will allow the City to restore important services and programs. He said the City's economic success is resulting in higher property and sales tax revenues, which make up 71 percent of City revenue.
"The estimated $750 million invested by the private sector coupled with the community investment in the Pinnacle Bank Arena and other improvements is creating new prosperity," Beutler said. "Our sales tax numbers are nearly 5.5 percent over the prior year, and we are projecting sales tax growth at 4.5 percent for each of the two years of the budget. New investment is driving strong growth in property values. For the biennium, we are projecting growth in the property tax base both from revaluation and new construction."
The proposed tax-funded budget for 2014-2015 is $166.5 million, a 4.28-percent increase over the current fiscal year. The proposed tax-funded budget for 2015-2016 is $172.58 million, a 3.65-percent increase over 2014-2015. Over nine budgets, the increase averages 3.64 percent a year.
The Mayor's proposed budget calls for a City property tax levy of about 32 cents, which includes a .378-cent tax rate increase for the stormwater bond issue voters approved in November 2012. The impact of that increase on a $150,000 home is an additional $5.67 a year. Of the 15 largest cities in Nebraska, Lincoln's property tax levy is the fourth lowest. The City's property tax levy has declined 38.5 percent since 1993. The City receives only 15.6 percent of the total property tax dollar.
The Mayor will present his 2014-2016 budget to the City Council at 1 p.m. Monday, July 14 in the City Council Chambers, 555 S. 10th St. The presentation will be carried live on 5 CITY-TV (government access cable channel 5) and available at 5tv.lincoln.ne.gov. The budget will be available at lincoln.ne.gov (keyword: proposed budget). The public hearing on the budget is scheduled for Monday, August 11. The new fiscal year begins September 1.
Beutler said when he took office in 2007, he faced a structurally imbalanced budget, and the Great Recession led to decreasing revenues, employee and program cuts, less investment in capital projects and sudden pension losses.
"The 139 jobs lost and nearly $7.6 million in spending cuts during my Administration have helped right-size the budget so that our ongoing revenues are very close to meeting the increased costs of services."
Beutler's budget proposes adding about 12 employees over the next two years. "Even with the proposed increase in positions, we will still have cut 8.5 percent of our civilian workforce during my time in office, even as our population has grown by 33,000 people, about the size of Hastings. If we are to meet the needs of a growing city, we cannot continue to do it by reducing the workforce."
But the Mayor said budget challenges remain, including the Police and Fire Pension Fund, which was hit hard by the recession. Taxpayer contributions to the fund have increased from a few hundred thousand dollars a year in 1998 to about $6.7 million in the current year. The Mayor's budget proposed a contribution of nearly $8 million in 2014-15, close to the actuarially recommended amount of $8.4 million. That contribution includes $1 million in unused contingency funds that will not be available the second year of the biennium, leading to a contribution of about $7 million in 2015-16.
Personnel costs make up about 70 percent of the City budget, and State law mandates that City salaries and benefits be comparable to other cities its size. The cost per FTE (full-time equivalent) has increased 23.7 percent over the past six years, outpacing the Consumer Price Index (12 percent) and sales and property tax revenue (15.66 percent). Employee health care costs are projected to increase by 12 percent in 2014-15 and an additional 9 percent in 2015-16.
The proposed budget makes use of the cash reserve fund created by the Mayor and City Council in a previous budget. Without the fund, Beutler said the City would have faced a $1.5 million program gap in 2014-15, resulting in service and program cuts.
The proposed budget also includes fee and revenue changes in the tax-funded budget totaling about $742,000 in 2014-15 and $823,000 in 2015-16. Changes in the non-tax funded budget include a 3-percent increase in Water and Wastewater revenues through rate adjustments as well as increased landfill fees.
"What I have learned in my seven years as Mayor is that community investment matters," Beutler said. "Maintaining our hard-fought momentum means we have to keep investing, keep growing and keep succeeding. The challenge is funding the investments of tomorrow without decimating what makes our community strong today. I look forward to working with the community to forge a consensus that preserves our past while building our future."