The City Council, in a 3-2 vote Monday, trimmed the proposed millage rate to 5.8 from 6. But most residents will still pay more taxes as property values have increased.
Though the $3.7-million general fund budget will not be set until at least early next month, the council had to establish the property tax rate Monday to comply with state law.
The council, which has scheduled a final budget workshop Aug. 5, cannot increase the figure, only decrease it, which is unlikely.
"We have an obligation to be fiscally prudent with the public's money," said council member John Kendall. "By staying with 5.8, we are meeting our obligation."
The 2002-2003 budget presented by City Manager Phil Lilly had called for a millage rate of 6, a 0.1816 increase over the current fiscal year, which ends Sept. 30.
He said the increase was necessary to cover rising insurance costs, including a 15 percent bump in health coverage.
Kendall, Kitty Ebert and Bonnie Taylor voted to cut the millage rate, saying taxpayers are stressed enough with the wavering economy and tumultuous stock market.
Russ Kreager and Susan Kirk favored the higher amount to give the city more wiggle room in a year marked by budget cuts, particularly in the Police Department, which could lose two positions.
Kirk said that the 6 mill rate amounted to $52,000 above the 5.8 favored by the majority of the council, and translated to a $10.25 increase for the average taxpayer.
"We can make it work, but some service and project decisions will need to be made," Lilly said of the new mill rate.
Aside from cuts in the Police Department, the city will need to look at a $75,000 plan for new sidewalks and $75,000 for council projects. Lilly had proposed using about $166,000 from a renewal and replacement fund to cover those.
Given that overall property values have increased to $270-million from $252-million, the city would have had to set a mill rate at 5.5 to keep taxes the same.
If the 5.8 mill rate holds, the owner of a home assessed at $125,000, with a $25,000 homestead exemption, would pay $580.
In other news, the City Council:
+ Endorsed the Community Redevelopment Agency's plan to begin the application process to list the newly restored Railroad Depot on the National Register of Historic Places. A 1992 survey of the Crystal Street building said it was eligible for the register, a national program aimed at protecting historic and archaeological resources.
+ Set a workshop to continue work on the proposed building height ordinance. The meeting will be held Aug. 2 from 10 a.m. to noon.
+ Set a workshop to discuss the council's expectations of Lilly and the manager's expectations of the council. Kendall said the meeting was necessary because the roles have not been clearly defined. The Aug. 14 meeting follows a noon discussion with the Beautification Advisory Committee.