Rockville City Council Dissects the Budget
Hall proposes a 24-point plan aimed at offering a $100 rebate; Pierzchala looks long-term.
One Rockville City Council member is pushing a package of spending cuts with an eye on a tax rebate. Another is offering an analysis with his eye on next year's budget debate.
The council on May 7 delayed one of its final discussions before it is scheduled to vote on a proposed $107 million operating budget and $75.1 million capital budget on May 21. The discussion is scheduled for Monday's meeting.
The delay gave the council time to consider budget reviews by council members John Hall and Mark Pierzchala. Hall is proposing a 24-point plan for trimming $1.5 million from the budget and using it to give homeowners a $100 tax rebate. The rebate had been included in four previous budgets before being cut in fiscal 2012.
City staff provided feedback to each of Hall's 24 points, suggesting the actual general fund savings would be closer to $1.4 million.
In an interview with Rockville Patch, Hall said that while it appears “there’s no appetite” among his council colleagues to revisit the rebate, he is hopeful that they will consider the cost-cutting measures he identified.
Pierzchala’s review notes that the city faces decreases in property tax revenue. The city saw a nearly $2 million decrease in property tax revenue due to a nearly 6 percent drop in the value of city property assessed by the state in January. The fiscal 2014 budget is projected to face a similar revenue downturn after the state assesses the other half of city properties this coming January.
The proposed budget for fiscal 2013, which begins July 1, maintains the real property tax rate of 29.2 cents per $100 of assessed value for all properties and the personal property tax rate of 80.5 cents per $100 of assessed value for commercial properties.
While the real property tax rate would remain flat for fiscal 2013, city staff is recommending a 2-cent increase in the rate to balance the fiscal 2014 budget.
Pierzchala’s review notes that the city’s Finance and Budget Task Force, which he chaired, recommended in its Sept. 2010 final report that the council consider a two-year budget cycle. The two-year cycle would give the city a better handle on property tax rates and revenue, capital spending and borrowing, city programs and services, and fund reserves, he wrote.
“The budget process is too focused on one year,” he wrote. “We need a better indication of tradeoffs.”
The council also could consider how to allocate a net increase of $352,190 recently identified by city staff. The increase is due to greater-than-expected tax duplication revenues from the county and savings on city contracts for auditing, Internet services and natural gas.
Fiscal 2014 is going to be “much tougher,” Hall said. That’s when the $1.5 million in cuts he is suggesting this year could become a necessity and not a luxury. The alternative—a tax increase—is less appealing, he said.
With state and federal income taxes on the rise, “We are taking a greater percentage of our residents’ income as governments than previously,” Hall said. “I don’t know that I want to aggravate that problem by raising this tax rate.”
Click here to view the city’s budget page, which contains the budget analyses by Hall and Pierzchala, and city staff's comments on Hall's plan.