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Going up!

Council votes to raise tax rate by half-mill

May 26, 2010 - It was by no means an easy decision, but faced with the prospect of diminishing revenues, the Oxford Village Council Tuesday night voted 4-1 to raise the tax rate to 10.62 mills, which represents a half-mill increase.

Following the vote, village President Teri Stiles noted the increase comes "with a huge apology."

"I think this council worked very diligently trying to keep the tax rate down and they looked at all their options as far as I'm concerned," said Councilman Tom Benner, who voted for the increase. "But with the outlook in the next couple of years, I think it was the only way to go. I really didn't want to do it, but I think it was just almost a financial necessity."

Last year, between the 1-mill tax cut approved by council and the drop in taxable values, the village lost $265,000 in property tax revenue, according to village Manager Joe Young's figures.

Faced with another reduction in taxable value of 10.6 percent for the 2010-11 fiscal year, the village would lose an additional $145,000 if the tax rate remained at 10.12 mills.

On top of that, property values are expected to decrease by a total of 17.5 percent over the next two years, according to county projections provided by Young.

Over the past few months, council cut as much as it could from the budget before looking at a tax increase.

"I think we did a heck of a job cutting the budget," said Councilwoman Maureen Helmuth. "I'm a little concerned we cut a little too tight if anything happens . . . We've cut to the point where some of our items are lower than they have ever been. The staff's cut. We've cut education. I'm not sure there's anything left to cut."

Village taxpayers will see the half-mill increase on their July 1 bill from the municipality. A mill is equal to $1 for every $1,000 of a property's taxable value.

Councilman Tony Albensi cast the lone dissenting vote against the tax increase. He lobbied for the village to keep its rate at 10.12 mills for another year, but his motion to do so was defeated 3-2 with he and Stiles casting the 'yes' votes.

"I've said all along, I'm not for increasing our millage rate," Albensi said.

Included in its vote to raise the tax rate, council approved a 2010-11 budget of $6.43 million, which includes a general fund of $1.95 million; police budget of $781,223; dispatch budget of $272,004; and Downtown Development Authority operating budget of $589,400. The village's water and sewer funds together total $1.95 million.

Some on council voted for the tax increase because they felt without the additional revenue the village would be dipping too heavily into its fund balances, which constitute reserve monies or "rainy day" funds for unanticipated or emergency expenses.

According to Young's projections, the municipality as of June 30 when the current fiscal year ends will have fund balances of $227,241 for the general fund; $197,677 for the police fund; and $90,108 for the communications (or dispatch) fund.

If the village had kept its tax rate at 10.12 mills, the municipality would have been forced to take more money from its fund balances in order to balance the budget and make up for the lost tax revenue from declining property values.

Young projected that if the tax rate was not raised, by June 30, 2011, the fund balances would shrink to $85,068 for the general fund; $110,854 for the police fund; and $78,534 for the communications budget.

The idea of significantly decreasing the village's financial cushion against future uncertainties didn't sit well with some council members, especially given property values, and therefore tax revenues, are expected to continue to decline for the next two years.

"I feel that it's a necessity to raise the tax some point, whether it's a half-a-mill or three-quarters-of-a-mill, because if we use all of our reserves this year, where are we going to be at next year with less revenue coming in?" Benner said. "It would be an easier pill to swallow, a half or three-quarters-of-a-mill increase (now), rather than come to you next year and the year after and say we're either going to go belly up or we've got to raise the millage (by) 2 mills to break even."

"I don't want to run the fund balances down to near zero in the first year of what looks like a three-year economic dip. That doesn't leave us with any cushion," said Councilman Dave Bailey. "If it's a rainy day fund and the forecast is for a three-day hurricane, do you burn up all your diesel to run your generator on the first day when the lights go out . . . and you've still got two days of hurricane left?"

Bailey actually made a motion to increase the tax rate to 11.12 mills the rate it was prior to council's approval of a 1-mill cut last year. It failed in a 3-2 vote with only Bailey and Helmuth supporting it.

In addition to the fund balance, there was also concern among some council members over potential revenue losses such as if the township switches from village to county dispatch services (a loss of $60,000 for the village) and if the township parks and recreation department decides to stop renting office space from the village (a loss of $12,000).

"I'm going to say the evil words I really think we really need to look at increasing the millage to cover some of these expenses that we may very well incur," Helmuth said.

There were also concerns about the village having enough money to pay for future infrastructure projects. "There's streets that need to be repaired. There's water mains that need to be repaired," Benner said.

CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.
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