SAFETY HARBOR — To balance its budget for next year, the city could raise the property tax rate and take some money out of its reserve fund. Or, it could keep the tax rate the same and take a lot of money out of reserves. This week, it was clear that city officials don't agree on the best course.
City Manager Matthew Spoor presented his proposed $12.8 million general fund budget to city commissioners Tuesday and included in it a tax increase from the current 3.38 mills to 3.5082.
One mill is equivalent to $1 of tax for each $1,000 of assessed, nonexempt real property. The owner of a home valued at $100,000 after any exemptions would pay $338 under the current tax rate and about $350 under Spoor's proposed rate.
Even with that tax increase, the city still would have to pull more than $678,000 from its reserves to balance the 2012 fiscal year budget.
Spoor's budget includes a merit raise of up to 3 percent for the city's 180 employees, a 0.5 percent increase in the city's contract with the Pinellas County Sheriff's Office, and a 5 percent increase in the cost of health insurance.
At a work session Monday night, most Safety Harbor commissioners seemed hesitant to balance the budget on the backs of residents.
Commissioner Joe Ayoub questioned dipping into reserves each year to balance the budget. He asked Spoor to bring back a budget that doesn't use reserves.
"The ideal is to balance the budget without depending on the reserves to do so," Ayoub said.
Ayoub suggested that the city develop specific criteria for how and when the reserve fund can be used. There is $8.7 million in the unassigned general fund reserve.
He also suggested eliminating positions "that we feel we can do without and still run the city."
Mayor Andy Steingold was opposed to taking use of the reserves off the table.
"What happens is you start having voluntary departures and start laying people off," Steingold said. "That's the only thing you can do. Parks and Recreation closes down. The library closes down and we will not be able to offer these services. . . .
"We will have a pack of people in here screaming and yelling, 'You are shutting down the city and have $8 million in the reserves? What are you doing with it?' "
Spoor said that 16 full-time employees have departed through the city's voluntary separation program, and six positions have been eliminated. That amounted to a $696,195 savings in salaries and benefits.
"It could be done," Spoor said of adopting a budget that doesn't dip into the reserve fund. But he added, ". . .What level of service are you willing to do without to get there?"
Safety Harbor has one of the lowest millage rates in the county. Commissioners praised city workers for providing quality services to residents despite a tough economic climate that has led to no raises and a dwindling staff.
Commissioner Nina Bandoni liked the idea of talking about the purpose of the reserve fund, including setting goals for the community and adopting a policy on how much money should be kept in reserves.
Commissioner Mary Lynda Williams said she doesn't support an increase in the property tax rate.
"It would be nice to give residents a break and maintain the same millage rate," she said.
Demorris A. Lee can be reached at firstname.lastname@example.org and (727) 445-4174.