Initial Spring Valley budget proposes 5.16 levy increase

David Phillips

The Spring Valley City Council reviewed a budget proposal that calls for a 5.16 percent levy increase during a workshop Tuesday, Sept. 3.

The council, which met Monday, Sept. 9, in regular session after this publication went to press and meets again Sept. 23, must set a preliminary levy by the end of September. Once the preliminary levy is set, the amount can be lowered, but not raised, before the final levy is set in December.

Most areas of the budget are proposed to remain flat from 2019 to 2020. However, the debt levy of $733,356, nearly half the total levy, is projected to increase 9.3 percent. City administrator Deb Zimmer pointed out to council members that the debt has already been approved for various projects already done and can’t be changed in order to meet previous financial commitments.

Debt service funds, which include four street improvement projects ranging from the 2008 Hudson Avenue to the 2018 Washington Avenue project, were determined at the time of the project financing.

“You don’t have any control over those levies because when you do the bonding for certain projects or commit to TIF (tax increment financing) districts, you are basically committing to that repayment schedule, so it’s like a loan,” Zimmer said. “That levy is preset, you can’t do anything with it.”

Of the other levies, $498,896 for general operation and $117,000 for library are proposed to stay the same as 2019. Parks and Recreation will increase 7.7 percent to $140,000 and the Economic Development Authority will increase 5 percent to $42,000.

The city also has enterprise funds, which are operated the same as a for-profit business, meaning they need to break even at a minimum, Zimmer said. These funds include ambulance, storm water, sewer, electric and water.

Revenue for the city comes primarily from local government aid (LGA), which is set by the state, and local property taxes, although fees and grants also play a part.

LGA in 2020 is expected to be $920,866, a 3.74 percent increase from 2019. Zimmer showed the council a table of historical LGA amounts for the city, noting they haven’t kept up with inflation. In 2006, the amount was $819,027 and in 2010 that went down to $797,702, remaining flat for four years, before jumping up to $860,781 in 2014 and having slight increases through 2019, with 2020 being the biggest jump.

Items that affect the budget, according to Zimmer, are inflation, state mandates that may result in more costs, council initiatives, citizen ideas, state law changes such as homestead exclusion and property tax formulas, federal changes such as requirements for health care, TIF districts that delay tax payments to the city and infrastructure.

In reviewing details, the council saw that changes in the budget were minor. Wage rates are projected to increase 2.5 percent, although Zimmer said the council could change that. There are also expenses for an election, which only comes on even numbered years, an increase for the law enforcement contract, although the exact cost for that isn’t known yet, and an increase for health insurance.

The proposal allocates $7,500 for engineering fees under the building code portion of the budget, but Zimmer warned the council that this would be going up in the future because the state demographer estimates Spring Valley’s population has surpassed 2,500. When the 2020 census makes that official, the city will be required to contract again to enforce the building code as it had done previously. In recent years, the city doesn’t enforce a local building code, but tells people they must comply with state building regulations.

In the streets department, the budget for part-time employees went up $9,000 to $20,000. The reason is due to the structure of compensation, which allows comp time during the winter when snow removal is an issue. Allowing comp time, a choice of the employees, rather than paying overtime is a savings for the city, but also creates some shortages at other times of the year.

The park fund also has an increase of part-time employees at the pool, increasing $6,000 to $23,000, partially due to the increase in minimum wage, but also due to a new requirement for a guard in the zero-entry baby pool, meaning an extra lifeguard is needed each day.

Ambulance wages are budgeted for $160,000, which is based on the current call volume, an increase of $11,000. Workers comp costs add $19,000, which is a $3,000 increase, although Zimmer said that may not be enough to cover the actual cost.

Three department heads were on hand for the workshop to answer questions about their budgets.

“I do think the department heads have been pretty conscientious of their budgets,” Zimmer said. “I think they worked hard to...not do much for increases.”

“I don’t think we can ask them to do any more with any less,” said Councilor John Dols. “We’ve got to provide services and we’ve got to be able to have the equipment and resources to do it.”

Mayor Tony Archer said the city historically has had to cross-train employees and work with what it has to keep the budget down.

“I think it is great how everybody’s worked so hard to keep those departments down, and keep the costs down,” he said. “We’re still getting the basics done, but it’s really tough.”

Zimmer pointed out that the road projects, which have resulted in debt, are the biggest issue.

“Something that used to be $1 million is now $5 million so it just makes it really tough on trying to keep the budgets balanced,” Archer said. “Fortunately we have a lot of good workers for the city that cross-train and they go through and help out each other and do what needs to get done.”

The city won’t know its tax capacity by the time the preliminary budget is due. The capacity affects the city tax rate.

Zimmer expects the capacity to go up with new development in the city. She also pointed out that some parcels in the Bucknell addition come off TIF this year, which means additional property taxes going to the city. Previously, those taxes were captured to reimburse project expenses.

“So even though you increase your levy, theoretically, if your tax capacity goes up, it may not have a big effect on taxpayers,” Zimmer said.

While a citywide increase in valuation could cushion the impact of a levy increase, when it comes to individual property taxes, property valuation changes will also have an effect on an individual tax bill, she added. For example, if the value of a house increases, that means the property will likely pay a higher share of city taxes than previously.

Individual property tax estimates, which also include school and county levies, are mailed to owners prior to the deadline to set the final levy in December.