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A proposed $13.17 million budget for the 2010-2011 fiscal year will not call for raising taxes, cutting services, laying off city employees or taking furlough days, according to Galax City Manager Keith Barker.
The budget is down from $16.02 million this fiscal year, an 18 percent decrease.
During the first budget work session last Monday, Barker announced that the city recommends raising trash collection and city decal fees and increasing water and sewer rates, which would not impact the customer using 6,000 gallons and below.
The recommendation is to increase the current garbage rate for hand pickup containers from $2 to $3 per week, taking the bi-monthly bill from $16 to $24, based on three containers and two pickups per week.
With the exception of the Dumpster fees that were raised last year, trash fees have not increased since their inception in May 1993. The city expects additional revenue of $115,000 with this increase.
Barker said additional revenue is needed to begin saving for a new garbage truck, which costs $140,000. The city bought a new truck two years ago, but the second truck used for pickups is a 2000 model, and the backup is a 1994 model. Once the city buys a new truck, the 1994 model would be retired and the 2000 model would become the backup.
City officials expect to spend $12,000 this coming fiscal year to rebuild the engine on the 2000 model. These trucks, Barker said, typically have a lifespan of eight years.
Another recommendation is to increase the rate for city decals from $15 to $25 per vehicle. This matches the rates in adjoining counties and would provide an additional $45,000 in annual revenue. Barker said this fee has not changed since the early 1990s.
The water and sewer rate increases approved last year helped to close the gap between revenue and expenditures, but the rates are still not enough to cover operational costs, said Barker.
The base rate of $28 accounts for 44 percent of the customers. This covers operational costs at the lowest tier of usage, but the higher levels are where the city begins running into a deficit, he said.
This means rates will slightly increase for utility customers that use more than 6,000 gallons, but the households that fall into the minimum amount of usage would not see a rate increase.
Barker said 41 percent of customers fall into the second tier, using 6,001-15,000 gallons, with a bill of $50.50. That bill will rise to about $57.25.
Increasing rates is also required to comply with the Virginia Resources Authority's no-interest loan that the city received to make improvements to sewer lines at Mill Creek Road and Stanley Drive/Shaw Street.
In fact, the city has some of the lowest utility rates in the state and was not awarded stimulus funds because its utilities are not self-supporting. This change is expected to generate $600,000 in additional revenue.
The city is also planning to increase the deposit fee for tenant connections from $75 to $125. This would cover two billing cycles and a portion of the proposed trash collection.
And, the city recommends increasing tap fees from $500 for general taps to $1,000, and implementing a $250 replacement tap fee. This fee would be charged only if the city has to provide a new tap for an existing service.
The city also proposes transferring $600,000 from the Galax schools' reserve construction account back to the city to mitigate budget challenges. This account is about $1.7 million.
These changes will increase revenue by $1.36 million.
To balance the budget, the city made several cost reductions reflected in the proposed budget.
The Galax Recreation Center will eliminate one part-time position, reduce janitorial hours and close an hour earlier on Sundays, which will save $17,000.
Barker also recommended reducing funding to outside agencies, except for the regional economic agencies, which would save $13,500.
The city proposes to eliminate spring large item cleanup and instead do two brush cleanups. Annual cost savings for this measure is $5,000. If revenue increases next fiscal year, council may consider reinstating the event.
The city manager has also recommended reducing Christmas bonuses by half or more for city employees and eliminating employee dinners, which would save $14,000.
Over the last three years — in order to save money — the city has reduced staff at public works through attrition by 10, at the water treatment plant by three, the police department by one and city administration by one. These positions have not been filled.
The city has reduced salaries at the water plant and hired trainees to replace workers, but the plant is down three full-time staff members. The city will need to hire a part-time employee within a year.
At the police department, one staff member is covering two positions. When a sergeant retired, a patrolman was hired at a lesser salary to take his place.
Also, when the tourism director position was filled, the new director was hired at a lower salary due to changes in the job description.
Cost savings on all positions totaled $557,000.
“We're not looking to backfill open slots now, but we can only do that for a certain amount of time,” said Barker. “We operate at a minimal staffing level at our water and sewer plant.”
A 1 percent salary step increase at Galax schools has been proposed, at a cost of about $41,000.
“Personnel costs have been reduced and staff is basically doing more with less in order to maintain services,” he said.
State funds to the Galax Police Department were reduced by $33,000. To compensate for that loss, one position hasn't been filled, and officers are taking measures, such as reducing fuel consumption, to make up the loss.
“It is hard to reduce the number of officers when it becomes a public safety issue,” Barker said.
The library lost $7,000 in state funds, but made up the difference by hiring new staff at a lower salary when personnel retired.
And, the state cut street and highway funds by $50,000. This means the city will have to cut down on road paving.
Although no tax increases were proposed at this time, they may go into place shortly — or during next budget season.
“We are on a path that is not sustainable without considering severe reductions in quality of life services and possibly some core services... We are not recommending a tax increase this year. However, the information is presented to make council aware that our tax revenue is not growing at the rate it did in the past,” Barker noted. “As costs continue to climb for services, we may need to revisit rates at some point in the future or consider how we operate our non-core services.”
Barker said his objectives this budget season are to avoid using the reserve funds; avoid reducing public services and quality of life services to citizens, such as the Galax Recreation Center, the Rex Theater and the Galax Municipal Golf Course; maintaining economic initiatives, such as the Crossroads Institute and Chestnut Creek School of the Arts; and avoid negatively impacting the school system, which will receive a 3 percent increase in city funding this year, or a total of $4.06 million.
“I'm pretty satisfied with this budget,” said Barker, who was promoted from assistant city manager to city manager last year. “My goals were to present to city council a balanced budget, and we've met those goals. We did the best we can to minimize fees and to not increase taxes.”
Barker said in September 2009, city council appointed a subcommittee made up of the director of finance, the city manager, council member John Garner and Mayor C.M. Mitchell to review figures and come up with budget strategies. The subcommittee also met with Galax school administrators to review their needs for the upcoming year.
“We try to maintain our schools,” said Barker. “Education has to be a priority. Well-educated kids become employees and employers.”
Barker and administrators began working on the city's budget in November — three months ahead of time. Challenges included closing the gaps in revenue losses, such as the drop in sales tax from $2.1 million to $1.96 million; meals tax from $1.16 million to $1 million; and real estate tax from $2.52 million to $2.27 million.
Barker said the city has not seen the full impact of a 1 percent increase in the meals tax implemented last year, and the reduction in real estate tax revenue is due to a significant drop in construction.
“For the state of the local economy, we're very positive with what we've been able to do,” said Barker. “We've been able to maintain customer [services] and the quality of life services.”
• Galax City Council will hold a public hearing in May on the budget and is expected to vote on the budget in June.