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Levy for city equipment up for renewal
(by Sue Reid - May 25, 2011)
Levy for city equipment up for renewal
By SUE REID
The wheels are in motion for a capital equipment levy to appear before Solon voters this November. The renewal of a safety-service vehicle and equipment levy will mean no increase in taxes.
Solon City Council's finance committee approved a motion last week declaring it necessary to renew the 0.5-mill levy, originally approved in the late 1980s and renewed every five years since then.
The motion passed on a 2-1 vote, with Councilman William I. Russo and Councilwoman Nancy Meany supporting it. Councilman William D. Mooney opposed it.
Mr. Mooney said he favors a shorter renewal cycle for the levy.
The levy, which is now actually about 0.41 mills due to it being renewed and not replaced and because the assessed valuation has been increasing, is expected to generate between $410,000 and $430,000 annually, Finance Director William Weber said. Funds for this levy are to purchase police, fire and service department vehicles and equipment. Police cruisers and snowplow trucks are purchased annually from this fund.
Mr. Weber told the committee he is recommending this levy's renewal for a number of reasons, primarily that the city's general fund will be under more pressure next year.
The general fund, which has a $32 million annual budget, will make more subsidies to other funds than it has in the past decade, Mr. Weber said. The $32 million budget will increase next year because of those subsidies, he added.
Some of the reasons for the pressure on the fund, Mr. Weber continued, include pay raises of 2.75 percent for police and fire contracts in 2012. That is compared to 2.5 percent this year. Also, interest earnings are low due to rates and principal invested. The Pettibone Road reconstruction caused the city to sell some investments, he noted.
Other reasons the fund will experience pressure is a reduction of low government subsidy from the state and the phaseout of the inheritance tax, which Solon received about 500,000 annually in the past. In addition, the general capital improvement fund will nearly be depleted by year's end. The joint economic development district income tax, which was $72,000 in 2010, is the only source of regular revenue for this fund, as well as an occasional subsidy. There was none in 2009 and 2010.
Mr. Mooney, who chairs finance, said he would be in favor of a shorter renewal cycle and suggested two years.
"Taxes are too high in this part of the country and to the extent we can reduce our property tax without hurting the city and let schools pick it up, that's a good thing to do," he said.
"I sure would like to find a way to reduce taxes if we can," Mr. Mooney said. "I'm not in the least bit objecting to how we are spending this money, but I'm not in favor of a five-year cycle."
In two years, Mr. Mooney said, the city will have a better idea of trends in income tax revenue, noting the income tax is starting to recover, as well as more information on the state budget, which is "up in the air."
Mayor Susan A. Drucker said, while she respects Mr. Mooney's opinion, she is concerned the city's cash reserves will not stay where they are for long. "Would it be a popular decision to lower taxes? Yes," she said. "But I want to make sure any decisions we make do not put future administrations in a bad position where they would have to introduce a new tax or do a replacement levy."
Expenditures from the safety-service vehicle and equipment levy are "all necessities to run a city," Mrs. Drucker said. "I don't think it's that easy to take $400,000 from somewhere else. We don't know what's coming down the road."
"We've built up a surplus in the general fund over the past 10 years," Mr. Mooney said. "We've been in good shape." He said he would like to see these safety-service vehicle purchases funded out of the general fund.
Mrs. Drucker noted that, although the city is not building new buildings, it has to maintain the ones it already has, and that comes at a cost.
"Nobody has a crystal ball," Mrs. Meany said. "My concern is the cuts which I feel will come from the state." She is leaning toward a five-year renewal, she said.
Mr. Russo said the city is limiting its road projects due to the budget, and the condition of many roads is appalling.
"I would be in favor of a five-year cycle," Mr. Russo said. "If we did have a buildup in surplus, I'd like to see it go to that," he said of funds for road work.
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