Cherokee Village works to establish 2012 budget
Most members agree that the solution to Cherokee Village budget shortfalls are to implement revenue increases, as well as cutting spending. Members of the Cherokee Village Budget Committee met Aug. 10 to discuss incorporating those approaches for the 2012 budget, which is in the planning phases.
One of the hardest hits for the city is the loss of $265,000 from the Suburban Improvement District (SID) in 2010, due in part to the slow economy and property owners defaulting on taxes and fees. Due to the Homestead Credit, homes valued at $70,000 are not required to pay property taxes. Because nearly 60 percent of Cherokee Village properties are listed for sale, the loss of the hospital and an aging population, the city has been experiencing building losses that have finally hit hard in 2011. The city's fire department has suffered the most as a result of the losses from SID assessments. Twenty-two percent of tax assessments from SID go to the city's street department, while only 13 percent is set aside for the fire department.
A possible funding source outlined by the committee was an Ad Valorem or property millage increase. Currently the city's millage is 2 mills, which generates $45,000 per mill annually. By increasing the millage to 5 mills, the maximum amount allowed, the city could realize $225,000 in revenue, an increase of $135,000.
State Turnback Money
The city also receives state turn back money from tax revenue.
While the city receives franchise fees on public utilities, the city council recently passed an ordinance requiring the water department to also collect the fee. In a letter from Cherokee Village Water Superintendent (verify title) Steve Rose to the city council, Rose stated the department would not collect the fee, claiming it is exempt and did not fit the description of a public utility, instead citing it is a state entity, owned by the people. The fee was to be charged on water bills as a way to create revenue for the city. Currently, the city is seeking the advise of the State Attorney General on the matter.
The city water department recently constructed a new million dollar facility and, according to Alderman Jerry Adams, is paid $174,000 annually to check the 804 fire hydrants housed in Cherokee Village for pressure and safety. Adams suggested SID pay the fire department, rather than water department to check the hydrants, creating an addition to the city's revenue. A few audience members, as well as Alderwoman Verna Mae Newman, were interested in receiving documentation the hydrants have actually been inspected, as required by the State Fire Marshall.
Permits and Licenses
Building Permits and occupation licenses are also obvious revenue creators for the city, but discussion about a possible one percent sales tax, which has been placed on the ballot for a Sept. 13 special election brought the most discussion.
One Percent Sales Tax
While Cherokee Village currently receives its share of state and county sales tax, a one percent city sales tax would generate an additional $50,000 per year. By encouraging voters to pass the tax, members of the committee explained it would create revenue, and also help grown the economy.
By collecting the tax on utility bills and point of delivery items, the small tax would barely be noticed and would help the city tremendously. Surrounding cities all have sales tax and one member pointed out that everyone shops at Walmart in Ash Flat or businesses and restaurants in the surrounding cities and pays sales tax, which ranges from two percent in Horseshoe Bend to 1.375 in Ash Flat, 1.5 in Highland and 1 percent in Hardy. Another exciting possibility for the city is a new Fred's Dollar Store and Pharmacy, due to begin construction after financing has been secured.
Other proposed revenue streams for the city included donations and contributions, and a possible advertising and promotions tax.
Business owners within the city have expressed opposition to the tax. Selling city property was also discussed. Due to the economy, members of the committee agreed it as not a good time to move forward with that option.
The group provided forms for department heads to justify spending and keep better track of where money was going. Through the help of department heads, the city will also perform strategic planning for the next five years.
A needs assessment for city staff positions will also be considered to ensure each employee is vital to the city government, something that a few members said had already been done during the recent departmental cuts, which include a hiring freeze. A services assessment will also be conducted for both the current time frame, as well as the future.
In addition to these considerations, Adams suggested offering any city employee the option to leave by Oct. 1 and be paid through the end of the year, allowing them time to seek other employment.
Some audience and committee members were less than agreeable with the suggestion. Their concerns included losing skilled employees and not being able to replace them.
Another possible solution included closing city offices at noon on Fridays, to save on salaries and utilities. Many felt the closing would be confusing to the public who might need to conduct business within the afternoon hours.
Some office personnel are currently leaving early and losing hours on Fridays. When an employee leaves work early, this causes other employees to have to fill in, something City employee Judy Bickell said she doesn't mind, but when the city hall becomes very busy, it becomes difficult.
Adams is in agreement with the millage increase and implementing an A and P Tax. He also feels, however, that the city should get out of the animal shelter and animal control business, saving the city $75,000 a year.
Currently, there are proposals from a non profit group and local business owner, John Matselboba, being discussed to take over the shelter, but nothing has yet become finalized.
Adams also suggested the city contact State Representatives Linda Collins-Smith and Lori Benedict and ask for their assistance in forcing the water department to pay the franchise fees which were passed by ordinance.
It is the city's hope that, through these measures, it can not only adopt a budget for the 2012 year, but also stick to it and set guidelines for future budgets.