Income Tax Levy .25% instead of .35% but what's the cost?

Tuesday the Administration Committee meeting contained a brief referred to as the city's 2025 plan.  The plan was explained during the May 12th Live Chat.  A recording of the Live Chat is presented on YouTube.  I've posted a link to that presentation at the end of this article.  I recommend watching. 

The key plus of this brief is that the proposed tax levy is now expected to be .25% instead of the previously talked about .35%.  

The hardest thing to swallow will be the city lending money from the Water and Sewer Funds into the TIF fund in order to pay the TIF debts until the TIF revenue can pay back the Water and Sewer Funds.  On top of that, for all new Carriage Trails subsidies the plan is to use the Water, Sewer and Street funds directly.  This plan spends most or all of the money from the Water and Sewer funds and trades it for an IOU from the TIF fund.  


 
The other item I have heartburn with is the new proposed TIF district.  This new proposed TIF district is to be created at the west end of Parktowne Blvd.  As you may know a developer has acquired this property and already has plans to put in $10 million dollars of ranch style rental units.  In this briefing we heard that the hope is to negotiate a 70% to the City 30% to Bethel Schools split of the money that is already slated to go to Bethel Schools.  We heard that the alternative is to impose the 75% to the city, 25% to Bethel if the school board is unwilling.  I personally think that the City should be going in with the position that Bethel Schools are entitled to 100% of their money but if they want to voluntarily contribute to the building of the new Firestation ask that they split it 20% to the city, 80% to the schools. Proposed Rental COmlex
City Staff did confirm during this meeting that the City does have $1.9 million dollars in the bank collected during the 8 years since 2005 when the income tax was passed in order to fund the new Fire House.  They also told us that the income tax dedicated to building the Fire House brings in about $300,000 a year.   The expected cost for the new Fire House is between $2 million and $2.5 million dollars.  What I didn't know is that once the city no longer has to use the dedicated Fire Station income tax in order to pay the debt from the Fire House then that income tax becomes money that can be used for Fire operations (to pay Firefighter salaries for example).  So if for example the city were to build the Fire House using the money in the bank and this year's tax collection, then next year there would be about $300,000 more money available to pay Firefighter salaries.  

By the way the 2025 plan uses the fact that if we don't need the dedicated Fire House income tax to pay for the new Fire House then we can use that income tax to pay for Firefighter salaries.  The 2025 Plan does it without using the $1.9 million already in the bank to pay for the Fire House.  Instead the city borrows the $2 million dollars we need to build the Fire House.  Instead of promising to pay back the loan with the dedicated Fire House income tax, we promise to pay it back using the TIF funds the city plans to get from the new TIF district (the one where the city gets 70% of Bethel School's money instead of it going to the schools). Since we aren't using the dedicated Income Tax to pay off the Fire House it can be used to pay Fire Fighter salaries.
Tax Split
  

As with many plans there are just a couple items that either make it fantastic or a complete disaster.  I look forward to the discussion on if we should be using the water and sewer funds to back up the TIF projects and, if we chose to do this, how it is we will we make sure that there will eventually be money generated to pay back these funds.  I also want to know how council plans to prove they will have the discipline to actually make those payments.  Furthermore, I think council will have a hard time selling me the idea that borrowing more TIF money to build a new Fire House instead of using the income tax already collected for that  purpose is a promise fulfilled.  It may make it more likely we can stay solvent longer if the levy doesn't pass, but that is very different than a promise fulfilled.     

Confused?  Try looking at the city's 2025 plan.


The 2025 plan was presented during the City's Live Chat on May 12th.  I highly recommend you watch it so you can see the official city position and know those arguments.












 

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