Understanding the City Budget Issue

Hi Mike,

Thanks for a thoughtful post. This topic of ID vs City really doesn't get the fundamental realities. There is nothing that the City provides in the way of services that SID could or would do more cheaply. There is nothing in the way of City services that we want to do without. Case closed. We have a good balance right now. It is a good division of authority and tasks to be done. To go back to the "old days" is just plain to go backwards. We need both. We have evolved to that place. The only thing that is stupid right now is to nickel and dime the City to death. No one in their right mind can say the combined City/Sid rates are excessive for the services provided. It's a total mystery to me what the fuss is about. Code Enforcement alone is worth the City tax rate.

Fyi on giving SID everything and getting rid of city govt. It won't happen. Zero chance of that happening. Hypothetically, if it ever did come to a vote, I would vote no. Why? Simple. SID would have to be completely redone and that would open up a can of worms none of us want. The new SID fees would be a heck of alot more than the total of what SID is now and what the city govt gets from us now. It would be alot more, alot more, alot more. The phrase, "Be very careful what you ask for, you just might get it" would apply here. If we did get rid of city govt then SID would have to be completely revamped, and if it was, the money that they would ask for and surely get would probably triple, quadruple etc than what you pay now. Take a look at other modern, up to date SID fees around Arkansas. No thanks. SID is capped right now and let's keep it that way. As much as city govt is inept at times, and it is, it sure beats the alternative and how much more money would come out of all of our pockets. That is why it will never happen and why CV will stay small and have a certain percentage of the population that is of lesser means. CV for years has been a split population and it will stay that way. You have the lakefronters and golf course fronters and then you have everyone else. It's not wrong or right, it's just reality. But as to SID taking over and getting rid of city govt, save your breath for something else, because that will never happen.

The tax vote for the hospital issue is a different vote completely and that vote is in December. This vote coming up is for 1% sales tax for CV only.

I just think it is much a do about nothing. If you add up the costs associated with trying to get this into law, and the projected pittance that would actually be collected from this, the net gains to the CV coffers is next to nothing. It simply isn't worth the time to even bother. Now, the talk of a sales tax for all of northern Sharp County that is strictly money used towards our 24/7 ER issue, now that is a different story. But that is not this, and this is a waste of time.

Hi trout,

I sense that you feel strongly about this!

NO NEW TAXES. WE WILL VOTE NO. KEEPING GIVING THEM MONEY AND THEY WILL SPEND IT. LETS JUST SEE HOW GOOD THEY ARE AT WORKING OUT OF THIS SITUATION THAT THEY GOT US INTO WITHOUT MORE MONEY COMING IN FROM US.

Hi Mike,

I want the tax to work because I believe it is necessary to come up with a tax solution. I and you just see a host of technical issues. Whether or not they can be overcome is the issue. All I can say is that mail order is of necessity huge in C V. Without taping into that revenue stream it will be difficult to generate anything substantial. What about auto purchases?

None of it is going to work. Let's be realistic. Nobody is going to pay much on this tax. People always find a way to skirt it and will in this case also. Very little stuff will end up being delivered to CV and therefore these businesses will employ less delivery people, therefore more jobs deleted from the area because of a tax that won't amount to a hill of beans.

Hi Mike,

Thanks for posting the SRC report on the proposed tax. So if it is a "point of delivery tax" -- that is, the tax is added when the service or product is delivered in the Village even if bought outside the Village, does that mean Lands End or Zappo shoes are going to be taxed by CV? I mean, I can understand getting the tax from the Walmart in Ash Flat when a TV is delivered in the Village from that store, but something from Amazon! How is that going to work?

I'm glad they are having a public forum and taking questions from the floor and questions submitted in advance. That's the right way to go about it.

Update:

https://youtu.be/LUNwC1IWwt4

Hi Forum,

The Village Journal has an article on the plans for addressing City budget shortfalls. Just like the debate in Congress, it is about the ratio of cuts to revenue. The recommendation of the committee is both. One of the most interesting parts of the article concerns the causes of the shortfall:

"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. "

Here is the article:

Cherokee Village works to establish 2012 budget

Wednesday, August 24, 2011
Tammy Curtis, Staff Writer

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.

Millage Increase

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.

Franchise Fees

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.

© Copyright 2011, Area Wide News
Story URL: http://www.areawidenews.com/story/1756064.html

Hi Forum,



I have posted this elsewhere as well, but it relates to this topic. It is from the Minutes of the City Council Meeting of July 26th:


COMMENTS OF CITY RELATED ITEMS: Cindy Harris announced that the Spring River Chronicle would be sponsoring a debate in the near future in regards to the 1% city sales tax. She explained that there would be a moderator with people speaking against and people speaking for the sales tax. She will advise the city the date and place.

No one has asked the question How does the city's pension plan work? Also do employees pay into SS and can draw SS and city pension. Do they pay into the city plan if there is a plan. Would have these problems if we contracted out or just had SID. How about the health plan is there one and how does that work. Once again more cost that we don't have funding for. Once again return to SID, or contract out. CITY HALL WISE UP you are losing the battle and we don't need more taxes or fees. We will never grow with the attitude you are using. Ten years and we added what 23 people yup we will reach that magic number of 5,000 in what a 100 years.

Alderman Lynn Maxedon opened the meeting, stating, "It is time to talk about voluntary retirements, reduction in salaries, if we want to keep going as a city. I am very afraid, if this compounds next year, the shape we might be in." Alderwoman Verna Mae Newman then countered Maxedon stating, "No one is going to retire for $500." This is the amount proposed as an incentive to coax the two employees eligible for early retirement to do so. The employees are Fire Chief Mike Taylor and City Inspector Charles Deloach.

http://www.areawidenews.com/story/1744020.html

Nobody would retire for 500 bucks. She's right.

Paul, like I said, CV has no money right now and if they try to coax Charles DeLoach to retire, CE will be backed up even further. If I were Taylor and DeLoach I would ask for a whole heck of alot more than $500, a boatload more, but the city won't and can't pay it so they will be staying on. Who are they kidding? You wouldn't find a 17 yr old pizza delivery summer job kid quit for a lousy $500! That one is laughable and I question whether the Alderman proposing it has a clue we are living in 2011 and not 1911, good grief!

Update:

http://myspringriver.com/2011/07/13/cutting-jobs-on-the-table-for-c-v-budget-reduction/

or

https://youtu.be/ZaXK0Zz-GEk

Hi trout,

First and foremost, I hope that you do not choose to leave. We need all committed citizen's with their hands on deck. What I don't understand is why you believe that the services now done by the City would be done more cheaply or any better by SID. As I've said 100 times, the combination of the two with their differing spheres works best. As I've also said 100 times, it is important to remember that SID is every bit as much a legal State-chartered entity as the City. Both are "government."

Let's keep it very simple. No city no budget problem. Sid would go back to running the fire department, security and road work. Apparently that idea of State turnback funds just really didn't work out like the"White paper" said it would. Sell of the city assests, turn over assests not sold to the state or county and start thinking of a way for SID to work better than it did in the past. Which I think would happen with the newer members of the commission. This is not the first time this has happened and it will not be the last. This time is different because of the city but once the people really think about what is it worth in the long run, SID is the better option. CV will not generate that much income from a sales tax. We have no real businesses here.

I bet the CA people are just waiting to get a sales tax and increased property tax for all the great services they are now recieving. Good time for them to think about sueing the city to get out of the city limits since the city will have a hard time providing those promised goodies. This city hall has pretty well helpled me decide that the village is no longer the place I wish to call home. Sad to say but we will begin looking for a new place once the economy starts to improve.

Hi Forum,

As the expression goes, there is much "more heat than light" around the City budget issue. People are taking the shortfall as an opportunity to address agendas that have nothing to do with a fair look at the root causes. This fantastic article by The Spring River Chronicle couldn't do a better job in laying out the facts. Give it a good read. There are many sections worth talking about. Some I want to post elsewhere as well. One excellent quote is:

"In 2009, approximately 2500 lots had delinquent S.I.D. fees. This year there are between 8,000 and 9,000 lots with delinquent S.I.D. fees. Perhaps now we can see where the budget shortfall has its origin; all we have to do, is to do the math. Given the best case scenario (8,000 lots minus 2,500 lots = 5,500 additional delinquents lots this year. When you multiply 5,500 times $132.50, it equals $728,750.00 loss of income to S.I.D. 22% of that is $160,325 shortage to C.V. Fire Department and 13% of $728,750.00 is $94,737 shortage to C.V. Street Department. Mr. Chandler does not see this situation improving; in fact, it will probably get worse over the next couple of years."

Here's the whole article:

DATE SET FOR CHEROKEE VILLAGE SPECIAL ELECTION FOR SALES TAX
Jun 16, 2011

September 13, 2011 is the date that has been set for the citizens of Cherokee Village (C.V.) to vote on whether or not to allow a 1% point-of-delivery sales tax to support an anticipated budget shortfall in the immediate future (2011) and in the years to come. (A point-of-delivery tax simply means an item is taxed at the point of possession. If you buy it in a store, you pay sales tax for the city that the store is located in; however, if you buy something to be delivered such as a dryer from Sears in Ash Flat, then the tax applied would be Cherokee Village’s rate that will show up when your zip code is put into the computer.)

It should come as no surprise to anyone that a budget shortfall is expected. In today’s financial climate, many cities are in the red. Cherokee Village’s employees, city council and citizens have averted this situation (so far.) They should all be commended for doing so; but how long can it last?

The employees of the city are all aware of the anticipated budget shortfall and many are doing what they can to help alleviate the situation. Some departments have cut back on their hours, cut back on the thermostat, cancelled out-of-town training (even training already budgeted), and cancelled contract services by using more in-house labor. In some cases, vacated positions have not been filled.

However, it appears that those efforts are not enough – and it could get even worse before it gets better.

At issue is more than whether or not the tax should be allowed, but also what difference having the tax (or not) would make. How would having this tax make a difference in the lives of the citizens of C. V. and what would be the results of the tax vote not passing?

First of all, one of the main reasons for the sales tax being introduced by the C. V. City Council is that the revenue to
the city from Suburban Improvement District (S.I.D.) has decreased dramatically, as S.I.D.’s own income has lessened.

S.I.D. receives some of its revenue from property assessment taxes. Of the assessment funds S.I.D. receives, 22% goes to the C.V. Fire Department designated to be used only by them, and 13% goes to the Street Department designated to be used only by them. Mr. Jimmie Chandler, General Manager of S.I.D., said that the average S.I.D. assessment is $132.50 per lot (whether empty or whether there is a house built on it) per year. In 2009, approximately 2500 lots had delinquent S.I.D. fees. This year there are between 8,000 and 9,000 lots with delinquent S.I.D. fees. Perhaps now we can see where the budget shortfall has its origin; all we have to do, is to do the math.

Given the best case scenario (8,000 lots minus 2,500 lots = 5,500 additional delinquents lots this year. When you multiply 5,500 times $132.50, it equals $728,750.00 loss of income to S.I.D. 22% of that is $160,325 shortage to C.V. Fire Department and 13% of $728,750.00 is $94,737 shortage to C.V. Street Department. Mr. Chandler does not see this situation improving; in fact, it will probably get worse over the next couple of years.

Since the CVFD and the CV Streets Department are already directly affected by drop in S.I.D. funds, let’s take a closer look.

The C.V. Fire Department has 15 firemen and a $75,000 operating budget to manage four locations (Basehart, Omaha, Onaga and Navajo), five fire trucks and two rescue trucks. All of the firemen are certified Emergency Medical Technicians (EMTs.) Most of the time there is only one fireman at a location because of shift work, off days, vacation, sick days, etc. In addition to this, the number of fires has significantly increased due in part to the aging of houses in the city. Most of these fires are electrical in nature because the wiring is aging and because there were no building codes when a large number of these houses were built. The trucks have required maintenance which is even more vital as they age because, of course, they can’t afford to replace them with newer models.

C.V. Street Department has over 350 miles of road to maintain, which includes paving, filling pot holes, clearing trees and debris after a storm and clearing snow, just to mention a few of their duties. Not only does the department have to maintain all of these roads but, in the recent case where a landowner built a new house on a property with no other houses on that road, the city had to pave, and now has to maintain, that road also. And this is not an isolated case. Each and every property owner has the right to build a house on property in C.V. whether the road is paved, gravel or dirt; however, the road then has to be paved and maintained according to the law.

A sales tax is only one way to tackle an ailing budget. Right now it seems to be the most controversial issue which is why the citizens need to be informed of the pros and the cons so that they can cast a well-informed vote in September. We plan to continue to look into this issue, to help both the proponents of each side explain their views, and especially to help the average citizen to understand the reasons for the problems.

So, if you have any comments or questions you would like to see addressed by our public officials, help us help you get the answers and information you need to make an informed choice on Sep 13; you can comment on this story, and any other story related to this, by going online to cvtax.myspringriver.com and leaving your comments there.

[Note: The city of Highland has a 1.5% sales tax, the city of Ash Flat has a 1.375% sales tax and the city of Hardy has a 1% sales tax. Of the Quad Cities, Cherokee Village is the only one that does not have a sales tax.]