Dover City Council members mended a $2.2 million hole in the FY 2015 budget, taking money from a reserve fund and granting pay raises.
Dover residents again have avoided a hike in their property taxes, but at the cost of using cash set aside to help stabilize electric rates.
Working during a three-hour special session June 5, Dover City Council members hashed out a transfer from the city’s electric fund, thus sidestepping an earlier proposal for a 7.22-cent property tax increase intended to fill a deficit in the $39 million general fund.
The $1.5 million transfer from the electric fund, as well as other cuts made during the night, successfully closed the $2.2 million budget gap.
The city’s entire municipal budget, including the general fund, water/wastewater fund and electric utility, is about $138 million.
But because Thursday night’s fix only affects the general fund, city residents still will pay increased charges for their water services. Some of those increases are intended to pay for water system upgrades, such as preventing groundwater from infiltrating the city’s sewer system.
No zero-growth budget
The evening started out City Manager Scott Koenig acceding to Councilwoman Beverly Williams’ request for information on a budget with no increases. However, council members seemed to find the idea unpalatable after Koenig explained it would eliminate almost all capital improvements, including street and water system improvements and place the burden on the FY 2016 budget.
“Either we pay now or we pay later,” said Councilman James Hutchison Sr. “You can’t have infrastructure without spending money to maintain what we have and make sure our citizens have what they need to have.”
A second plan, which among other cost cutting measures would have decreased the property tax hike by one cent, also would have offset the increase with a rebate to city electric customers. That plan also received considerable discussion, but was ultimately rejected.
Councilman William Hare instead suggested cutting out the tax increase completely, with the money instead being taken directly from the electric fund.
Koenig noted the city has overcollected on funds used to keep electric rates low, saying Dover has the second-lowest power rate in the state. Gov. Jack Markell’s office has repeatedly stressed that low electric rates attract new businesses and spur economic growth, he said.
“We need to be concerned about economic development,” Koenig said. “The city budget is not helped unless there is active construction in the city.”
Having a healthy electric fund reserve also means more favorable ratings when the city needs to raise money for future projects, he said.
Councilman Sean Lynn then began a series of motions intended to chip away at the deficit, successfully lobbying to eliminate cash for training and conferences for the mayor and council members, moving street light funding to the electric fund, and doing away with an emergency services vehicle and a K9 for the police department. Council also eliminated a patrol car and motorcycle from the police department budget over the objections of Police Chief Paul Bernat.
Councilman David Anderson then made a formal motion eliminating the property tax increase and transferring necessary cash from the city electric utility fund to the general fund. Anderson later amended his idea to require the additional money come from the rate stabilization fund.
Anderson’s idea passed on a 5-4 vote, after which Hare moved to give non-union employees a 3 percent pay increase, as put forth in Koenig’s original budget proposal.
That proposal passed by a 6-3 vote.
The pay increase is commensurate with pay hikes negotiated with three of the city’s four unions. Contract talks still are underway with the last union, and any increases granted to American Federation of State, Municipal and County Employees will be dealt with in a future amendment to the budget.
Anderson also proposed setting aside $100,000 to improve recreational facilities on the east side of the city, despite objections from Councilman Adam Perza who said that without a completed recreational needs study, now under development, earmarking that money would be premature.
Despite Perza’s objections, that measure also passed by a 5-4 vote.
Only eight members of the public watched at least some of the deliberations, with five leaving before the end of the session.
Koenig and city Treasurer/Controller Donna Mitchell were scheduled to work out a final budget ordinance, which will be presented at Monday night’s council session. It will be reviewed again at the June 23 session, and if approved, will take effect July 1.
Council will again meet in formal session at 7:30 p.m. June 9.