Beutler presents budget changes to City Council

After last week’s shock over rising electricity rates, Mayor Chris Beutler nixed a plan to raise property taxes.

On Friday, he said he will instead move $1.7 million from a seldom-used Special Assessments Revolving Fund to balance the city budget.

Earlier, Beutler opposed bailing out the budget with the fund.

“I remain disappointed that we must resort to one-time funds to balance the budget,” he said in an announcement Friday.

“However, I am even more convinced that deeper cuts will be harmful to Lincoln’s future.”

Beutler had hoped to use $1.5 million in revenue from a 1-cent property tax increase to balance his budget.

The City Council had mixed reactions in a short but tense discussion that followed the mayor’s Friday morning announcement.

Council members gathered for a brief, mostly philosophical, discussion of budget matters.

The transfer could be called a rainy day measure, several noted.

“We need to decide whether it’s really raining,” said Councilwoman Robin Eschliman.

Councilman Jonathan Cook seemed to embrace the plan, saying cuts already were severe and many city positions were being eliminated.

But Councilman Ken Svoboda said proposed cuts were not severe.

“We’re not closing doors,” he said. “I think (even) taking $1.5 million out at this time is more than I can support.”

Svoboda suggested the special assessment fund might be better used for what it was originally intended — public works.

At one point, he referred to Beutler’s new plan as “stealing” from the fund.

Councilman Jon Camp cut in, saying: “It’s not stealing, it’s transferring.”

Svoboda also hinted at budget cuts he may propose at Monday’s budget meetings. Cook asked him to discuss his cuts Friday, asking whether he was waiting for a “surprise factor.”

But the council spent much of its time on Beutler’s plan.

“I don’t think we got into problems by using one-time money,” Councilman Dan Marvin said.

Times are hard, he added, with a poor housing market and $4 gas possibly limiting people’s spending and holding down city sales tax revenue.

The mayor pulled his proposed tax increase out of concern it and high electrical bills would put a strain on Lincoln families.

Some of the transferred money will pay for the city’s rising electrical bills.

Beutler also added library hours and a mental health program back into his budget.

The special assessments fund has grown to about $10 million — mostly in interest — over the years.

In an interview after the meeting, City Budget Officer Steve Hubka said the fund should not be considered “found money.”

“I’ll show you how unhidden it is,” he said, pointing out the fund clearly listed on the city’s Web site.

The city has a budget problem, not a financial problem, he added.

But with the way the funds are set up — and the city charter calls this one “inviolate,” Hubka said — they are harder to access.

Tapping into this one will require council approval, he said.

The Special Assessment Revolving Fund was used extensively in the 1970s and early ’80s to put in infrastructure for new residential developments, Hubka said.

The city used its own dollars, or its better loan terms, then recouped its costs as developers paid the money back at higher interest rates.

“We were bearing the risk instead of them,” Hubka said.

Earlier in the budget process, Beutler proposed tapping $6.4 million from the fund to create a Fast Forward Trust Fund for economic development.

That fund will help the city pay $235,000 it owes to Information Technology Inc. from a prior economic development deal.

Beutler also hoped it would provide $200,000 to create a new Development Services Center, a one-stop shop for developers.

The mayor is still requesting the $6.4 million in his new budget resolution, which, along with the transfer, will take $8.1 million of the special assessment fund.

The remaining nearly $2 million could be used for paving alleys or other projects, in new or old neighborhoods.

The city also continues to collect payments from past projects, which go in the fund.

Reach Kendra Waltke at 473-7303 or kwaltke@journalstar.com.