DURHAM — Durham citizens can expect to see their tax bills go up next year, but that should not be too much of a surprise.
Some of the 1.29-cent tax-rate increase that Budget Director Bertha Johnson showed the City Council Thursday would go for debt service on things the voters approved: such as the 2010 bonds for catching up long-neglected street repairs.
Nor should it come as a complete surprise that, even with a raised tax rate, the city is looking at a $4.3-million shortfall in the 2014-15 fiscal year.
“This probably doesn't soften the blow,” City Manager Tom Bonfield said, but the increase is “substantially lower than we ever thought” when the street bonds and some other catching-up funds were approved.
The $4.3-million gap between income and outgo is good news, in a way, as well. This time last year, projections showed a 2014-15 shortfall of $9.3 million, with red ink rising year by year to $17.4 million in 2017-18. Current projections show that year’s shortfall down to $12.9 million, as the city budget office has adjusted its estimates when real data comes in, and Johnson said the shortfall projected last week is not final.
“This number will change. I don’t see it changing for the better,” she said.
The tax increase factored into Johnson’s projections would raise the city tax rate from 56.75 cents per $100 of property valuation to 58.04 – adding $19.35 to the tax bill on a $150,000 house.
That money would go toward a projected $180 million budget for the fiscal 2015 general fund, which covers regular city operations, including salaries.
Salaries are one factor that raises next year’s anticipated spending from the current year’s $169.6 million.
The city has to pick up the cost of 16 police officers and 15 firefighters who were added to the city payroll in years past with federal recession-relief grants. Those grants expire June 30, and were made with the city’s agreement to pay the added employees’ wages after the federal money ran out, Bonfield said.
Projected spending also includes employee raises averaging 3 percent – 3.5 percent for police and firefighters – and raised retirement benefits, and more money for street upkeep and catching up on deferred maintenance.
Revenues – property taxes, sales taxes, permit fees and so forth – are going up with an improving economy, but are not back to pre-recession rates, according to Johnson’s presentation. And the $180 million general fund with its $4.3 million gap does not allow for cuts in state and federal funds, new or expanded city services or extra money for Parks and Recreation.
Parks Department Director Rhonda Parker and Assistant Director Beth Timson presented a plan for improving park and trail maintenance and buying property for future parks – with a penny-for-parks added to the property-tax rate.
Council members were not enthusiastic.
“I’m not there yet,” said Councilwoman Diane Catotti.
“I’m not ready to raise taxes,” said Mayor Pro Tem Cora Cole-McFadden.
“We’re going to have some more discussion on this,” said Mayor Bill Bell.