The URL can be used to link to this page

Home My WebLink About1985-02-11 85-116 RESOLVE85-116 - IntrMuced by Councilor Tilley, February 11, 1985 CITY OF BANGOR (TITLE) Outline f possible 5 year Projections By W City Cawwil Of W CtitP ofBomgpr: ... "SOLVED,. - - The Council Research and Review Group be assigned a project to outline. possible 5 year projections relating to income, expense andthe possible affect on the property tax rate. Supporting information with Possible alternatives and projections should be submitted to the City Council for their review and consideration no later than the second City Council meeting in May 1985. For reference and further information, refer to the attached letter of January 31, 1905, Subject - Financial Planning 65-116 RESOLVE IN CITY CO@LIL February 11, 1985 ASSinloent to the Council Research anlI Iatefinitely Postponed by Review Group the Outline of possible 5 year the following yes and no votes. Projections. Councilors voting yes: Hewn, Cox, Davis, Gass and l arthy. Councilors voting Tilley, wheeler and Willey. CouFiler absent: Frankel. PRI( %Sl lFyy i� 65-116 January 31, 1984 To - Members of the Bangor City Council City Manager Subject - financial Planning Bangor faces the uncertainty of state and federal funding in an atmosphere where taxes in Maine are among the highest in the nation and where Bangor's property tax rate is ane of the highest in Maine. Reduced assistance must be deal[ with In the midst of requests for additional spending for education and city operations. We are all aware of the School Cuiimittee's efforts to improve the quality of education and the potential cost. At arent meeting between the School Committee and the Council Finance Committee (and other councilors), Superintendent Pierce noted that the radar group was projected to sad 300studentsduring the next few years. At an average cast of $3100 par student per year, this represents $630,000 of which 42% or $365,000 is reimbursed by the state. The remaining $365,000 (lessa few thousand from the federal level) most be absorbed by the city of Bangor. He also Pointed out that the state took over the local payments for most school retirements a few years ago, and that he was concerned that these costs might be returned to local levels if the state findsitself short of funds. Bangor's share would be well in. excess of $1,000,000 annually. If the Council is to fulfill its obligation to the city it must develop a plan of action. Such a plan must consider certain assumptions, the available options, limitations on spending and a desired property. tax rate. I have put together a "broad brush" plan for the next 5 years which might be considered asstarting Point. It indicates to me, that unless we take a positive approach to the city's financial future, we J n be n deep trouble in three years, a after using most of the unle5ignatedre n Even this unsophisticated approach would require ordinance changes, many written procedures and possibly a charter change. The few lours I have been able to devote to this must be multiplied a hundred times to develop an acceptable plan. We c no longer assume that what we have today is sufficient for tomorrow. Changes are can the my and umoust start now to establish exactly, where we are and what we most do to provide Bangor with a stable tax program that will,encourage Investors and developers to work with us. Last year, the Budget Mevlew Committee was good start. An offshoot effort has been working is the e c development area for ronths.The Council Research and Review Group, also directly related to the Budget Review Committee, was approved in October 1984„ and is the ideal vehicle to research such a plan, mnsiderthe options and alternatives and present them to the Council to consider. A plan, once devised, would be updated annually by [he Group based on current Information. The Council must take a positive planning approach. It must give direction to the city administration and school department Time passes so quickly that we cannot wait to see what is going to happen at federal and state level, we know something will. Efforts such as Councilor Willey's to find a way to make the city health and nursing facility a viable onemostbe fall owed up. The Bass Park Corporation 2 Boas not pap property taxes, has been unable to pay its rent and the property is detoriating. The $100,000 cash flow (not profit) they expect to report for 1984 on a $5,000,000 Investment is nothing to get excited about. On a private basis, paying property taxes, rent or depreciation and properly maintaining the property, they are reporting a loss of $400-600,000. What are we going to tell the People when, In the midst of belt tightening andhigher taxes, that $1,000,000 Is needed to refurbish Bass Park? Again? The operation must maintain itself and turn funds Into the city. We must find a way to accomplish this. Attached is a copy of my projection and I repeat, it Is just a broad approach to stimulate your thinking about the future. - Arthur Tilley, City Councilor A "Broad Brush' S Year Financial Projection for the City of Bangor Assumptions - I. Maintain a zero Increase in. the property tan rate as long as possible. 2. Assessed valuation will rose in stable. The gains will be offset by reduced assessments On closed and partially operating shoe shops and downtown stores. 3. Spending Increases will be limited to 2% of the prior year, plus or minus funds generated (or not) from changes in tan assessment. (Bch II) 4. Adjust present reserves to a "Reserve for Future Costs", all Or in part, on the following basis: (Sch 1) a. Reserve for lean to Bangor Int. Airport. Assume it will be paid to the General Fund. b. Reserve for equipment replacement. Transfer the current balance' in total to the Reserve for Future Costs. Expenditures for quipmmnt each year would be limited to the present rate of provision to the re a comparable amount would be all Owed for lease o rental serve, for equipmentoe C. Bus reserve. Eeave an amount sufficient to cover � current coittments for new buses and related items. Transfer the balance to the Reserve for Future Costs: d. Fire equipment reserve. Treat the same as (b), equipment reserve. . Insurances Determine the required amount to do claim exposures andumbrella insurance requirements v Transfer the balance to the Future Cost Reserve. f. Special Reserve. This was set aside for future costs and would be transferred entirely. The delayed assessments approved by the Council should add about $400,000 to the original amount. 5. Based on the cash balance at June 30, 1984, the application of the reserve funds foroperating purposes would leave a little war $2,000,000. In cash in the General Fund for operating purposes, which should be sufficlent to avoid borrowing. 6. Assume combined reduction in state and federal funds will average $250,000 each year, reaching $1,250,000 in the fifth year. 7. Other sources ofnc ome (licenses, fees, etc.) would remain stable at present levels.Interest income will decrease as the reserve are used. -Projected Effect on PropertyTax Hate Based on the Listed Ass m t<14AR:89 Spending increases 1986-86 508 1986-81 IVA7-RB 1,027 1,556 2,096 1989:90 2,646 Reduced federal and state funding 250 500 750 1,000 1,250. Reduced interest on reserve funds - 0 70 150 - 260 400 "Required from the reserve 758 1.597 2,456 3.356 4,296 _ 'Beginning- reserve balance 3.419 2,661 1,064 0 0 - Ending reserve balance 2,661 1,064 0 0 0 Additional requirement Fran taxpayer 0 0 1,392 3.356 4.296 Effect on tax rate - per $1000 0 0 2.93 7.07 9.05. Tax rate per $1000• 32.35 - 32.35 35.28 42.35 5i.4o *Based on assessed valuation of $475,000,000