Residents won't see city tax hike

TUPELO – They’ll delay road work and freeze municipal salaries, but city leaders said Tuesday they won’t raise taxes in one of the toughest fiscal years in memory.
Mayor Jack Reed Jr. presented his proposed FY10 general-fund budget to the City Council during a three-hour work session. They’ll hold a similar meeting Thursday and could have several more before the final draft gets approved.
The city has until Sept. 15 to adopt the budget, estimated at $34.7 million, which goes into effect Oct. 1.
According to the figures, Tupelo will have nearly $2.4 million less in the coming fiscal year than the current one. At the same time, it must budget for a nearly half-million dollar insurance premium increase.
The revenue slide has multiple causes: declining sales taxes, fewer fines and fees paid, and lower interest rates on income-earning accounts, to name a few. But the city also hasn’t yet budgeted for federal grants, and they’ll likely earn at least $1 million by the end of the fiscal year.
Even with the grants, the city faces a budget hole unless it cuts back in some areas. Reed proposed freezing salaries for the city’s roughly 500 workers, slicing the asphalt-overlay program by $400,000, and dropping the travel and fuel budgets for each municipal department.
But he also plans to hire a few new employees, including a new communications director, and spend more than $265,000 on eight more tornado sirens to cover the entire city.
“We made some tough choices,” Reed told the council. “It’s not easy to come up with this at this time.”
Reed said he met with each department head along with interim Chief Financial Officer Kim Hanna to draft the general-fund budget. Of Tupelo’s 11 departments, seven have reduced their individual budgets for the upcoming year to help save money.
But that might not be enough to avoid dipping into the city’s unreserved fund balance – also called its rainy day fund – by some $2 million.
“If there ever was a rainy day,” Reed said, “this is it.”
Ward 6 City Councilman Mike Bryan warned against such a move, saying the municipality needs a robust fund balance to keep its high bond rating.
Reed and Hanna said Tupelo’s in better shape than most cities with more than $22 million – nearly eight months worth of operating funds – stashed away. Hanna said the city could drop to $10 million without affecting the bond rating.
“We’re in a good financial position right now to hit this hard time,” Hanna said. “It’s uncharted territory.”
If revenues increase beyond expectations through the fiscal year, Reed said the city could adjust its budget to allow for salary hikes or other needs.
“This is a work in progress,” he said. “It’s a long process, and we’re committed to work on the budget together.”
Reed, Hanna and the council went through each budget item line by line, with Reed and Hanna explaining their decisions and council members posing questions. They got about halfway through before adjourning at 8 p.m.
Unlike previous councils that assigned sub-committees to tackle the budget, the current group decided to review the document together. Anytime the full council meets, it opens the doors to the public and the media.
“We’re committed to transparency,” said council President Fred Pitts.
Contact Emily Le Coz at (662) 678-1588 or emily.lecoz@djournal.com.

Emily Le Coz/NEMS Daily Journal