City of Bolivar residents will head to the ballot box for a special election this November to consider a tax reallocation issue leaders say will help resolve shortcomings in the city’s budget.
Although the Nov. 5 ballot language says the issue is a quarter-percent tax increase, Bolivar City Administrator Tracy Slagle said the city “isn’t asking people to pay more.”
“It’s just asking to reallocate how the money gets spent,” she said in her office, joined by Bolivar Mayor Chris Warwick, Monday, Oct. 7.
The ballot issue asks voters to approve a one quarter of a 1% general sales tax increase with funds going to the city’s general reserve.
At the same time, if the measure passes, the board says it will decrease the city’s capital improvement sales tax by the same amount, essentially leaving the tax rate at the same 2.5% level.
The city’s board of aldermen unanimously approved the ballot issue — and subsequent ordinance to decrease the capital improvement tax if the measure is approved by voters — during a Wednesday, Aug. 21, special session.
Aldermen Ethel Mae Tennis, Steve Skopec, Justin Ballard, Mike Ryan, Steve Sagaser, Alexis Neal and Charles Keith voted to approve the ballot issue. Alderman Thane Kifer was absent.
“We want to make sure people realize there’s no increase in taxes in what we’re proposing,” Slagle said. “But, when you go to the ballot, it will say, ‘This is an increase.’ It’s not changing the overall amount of money we’re using. It’s just reallocating into a different piece of the pie.”
“That’s the biggest thing we want people to know,” Warwick added. “There’s not anyone on the board with the thought process that we need to raise taxes here. We just need to be able to do the city’s business with the money we’ve been given.”
In 2019, the city’s general fund revenues are expected to come in around $2,139,300, while the capital improvement fund should bring in around $1,069,600.
Slagle said the tax reallocation would shift around $500,000 from the capital improvement fund to the general fund, in turn giving more flexibility in the way the tax dollars can be spent.
In the August board meeting, Slagle said the city pays around $700,000 in lease payments each year from the capital fund. That account had a $248,000 surplus in 2018.
And, what about continued costs that need to be paid from the capital fund?
If the reallocation passes and less money funnels into capital improvement, the remaining balance can be paid from the general fund until those leases are paid down, Slagle said.
“Funds allocated to general may still be used for capital,” she said. “But, funds in capital cannot be used for general.”
While funds in the general fund can be spent any way the city and board see fit, dollars sitting in capital improvement are restricted.
“That’s the good thing about general,” Warwick said.
The mayor said the city came up with the idea for the reallocation when the Bolivar R-1 school district took a $6 million no-tax-levy-increase bond issue to the voters in April.
That bond issue passed with overwhelming support with around 80% of voters approving the measure.
Warwick said city leaders, in turn, asked, “How can we, as a city, see an increase without affecting overall taxes?”
“We’re looking to see what we can do for general, because it’s our operational costs that are killing us,” he added.
Supporting public safety
Slagle said stagnant sales tax income over the past several years makes continuing increases in operational costs more and more painful.
“Our sales taxes aren’t increasing at the same rate that typical operational costs are,” she said. “Utilities go up, payroll goes up, gasoline goes up — all your standard operating expenses.”
With an increase in minimum wage on the horizon with the passage of Proposition B in November 2018, Warwick said, the time for change is now.
“How can we not address that moving forward?” he asked. “That’s all operational cost.”
While the capital improvement fund covers the city’s large purchases, such as equipment, Slagle said the general fund can cover personnel expenses.
“We have to take care of our employees as much as we have to take care of our equipment,” she said. “You want to know that the fireman who comes to your home, the police officer who approaches you on the street, the people who take care of our water and sewer infrastructure, that they’re qualified. In order to get qualified people, we have to offer a competitive wage.”
Warwick said it’s important to note large equipment purchases come from the capital improvement fund, not the general fund.
“So I know there’s a concept of, ‘Well, you keep spending money,’” he said. “We’re spending money out of funds we have in capital right now. So yes, in a sense, we’ve got to make those bigger purchases with the money we can. Reducing this, that would set back some of those bigger purchases.”
If the ballot issue passes, Slagle said the money previously earmarked for capital expenses would likely go to the city’s fire and police budgets to help cover personnel expenses.
“We froze three positions in police and fire last year because of trying to stay within the budget,” Warwick said. “Administratively, we’ve made sure that even the positions we have, are they needed?”
Slagle said the city’s aldermen also chose to nix cost of living and merit wage increases for city employees across the board last year.
“Our wages are lagging,” she added. “Turnover’s expensive. And, for the police department, it can take months to refill a position.”
With the loss of the city’s Federal Emergency Management Agency SAFER grant, which helped the city’s fire department transition to a combination career/volunteer department in 2014, Slagle said the city has supplemented its “public safety programs by about $325,000 a year out of our general reserves” since 2016.
“The fire tax isn’t enough to cover the full operation of the fire department,” she added. “Nor is the park tax enough to cover the full operation of the parks department.”
However, she said the reallocation “really would help pay for both police and fire salaries.”
Slagle said personnel costs for the fire department hit around $575,000 annually, while the police department’s annual salaries cost around $1.08 million. She added the police department has the “bulk” of the city’s employees.
Both departments provide the city with around-the-clock coverage.
Saying there is a large volume of calls for service both departments on a daily basis, Slagle said she thinks the city has “done the best we can with the amount of staff we have.”
However, she said the city likely wouldn’t unfreeze the additional fire and police positions right away.
“I’d rather live with it a year or so and see how we come out,” she said.