New Lincoln Mayor Leirion Gaylor Baird's plan to balance the city's two-year budget doesn't include cuts to services, but instead tackles a $6.79 million shortfall by dipping into the city's saving account.
The first-year mayor wouldn't raise the city's tax rate to adjust the 2018-2020 budget adopted last year.
The adjusted, tax-funded budget for the upcoming year totals $214 million, if approved by the City Council.
Gaylor Baird would use the $1.8 million property tax windfall resulting from higher-than-expected home valuations and over $497 million in new construction last year, but she isn't proposing a tax rate increase.
City employees wouldn't face layoffs in the proposed $3 million budget cuts, which mainly involve savings from vacant jobs. No city fees would be raised under the mayor's plan.
The shortfall came after sales tax receipts — the city's largest revenue source — lagged behind last year's projections, which the mayor described as "aggressive."
Faced with this shortfall, Gaylor Baird said she's confident her budget adjustments correct course appropriately and responsibly.
"Our approach to solving this shortfall in projected revenues prioritizes ensuring fiscally responsible stewardship of Lincoln and maintaining the services that our residents expect," the mayor told reporters as she unveiled her plan Thursday.
She said her staff never considered raising the city's tax rate as a means to addressing the shortfall because it could draw from a healthy cash reserve to address the problem.
"We want to make sure we’re protecting our residents the best we can, and we keep their wallets in mind when we budget and when we make changes to the budget,” she said.
A net withdrawal of $1.9 million from the city's cash reserve, which sits at over $46 million, would help close the funding gap under the mayor's plan.
If adopted, this adjusted budget makes more valuable the estimated $13 million in new revenue from the quarter-cent sales tax voters enacted in April to boost street repairs.
That's because Gaylor Baird won't be able to use $1.9 million in general funds her predecessor, Chris Beutler, had hoped to move into the Transportation and Utilities budget if the city met its revenue projections.
Instead, that contingency money helps close the budget gap.
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Lincoln Transportation and Utilities Director Miki Esposito said this proposed budget doesn't stop any street work because the money had not yet been earmarked for any specific projects and had not been moved into the department's budget.
The mayor's proposed budget keeps a planned increase of over $1 million in street funding in the upcoming fiscal year, when the city plans to spend $60.3 million.
That total does not include a six-year sales tax that takes effect in October. That tax money will fund street work determined by a citizens group later this fall and ultimately adopted by the City Council. Work should start next year.
Those sales tax dollars won't reach the city's coffers until December and will need to be formally amended into the 2020 budget, Esposito said.
The new sales tax money was sold by city officials as additional funding, not replacement money, to fix ailing neighborhood roads.
Gaylor Baird said Thursday she will work to ensure those sales tax dollars are spent as advertised.
The absence of the conditional street funds along with savings from vacant jobs in several city agencies account for more than 80% of the proposed budget cuts. Miscellaneous, smaller cuts make up the remaining portion.
At the Lincoln-Lancaster County Health Department, for example, officials plan to cut $15,000 in budgeted vaccine costs.
Interim Health Department Director Pat Lopez said fewer refugee resettlements in Lincoln have led to less demand for vaccines at the department's clinic.
Another proposed change includes ending contracted Handi-Van service through Transport Plus. The city would do all of the door-to-door transports for people with disabilities under the change, a savings of $147,000.
Only 16 cents of every property tax dollar paid in Lincoln goes to fund city government. Sixty percent of property taxes paid by Lincoln property owners funds Lincoln Public Schools, and 13 percent funds Lancaster County.
Of the three, only the Lancaster County Board of Commissioners has proposed a budget that would increase its tax rate. But homeowners in Lincoln are likely facing higher property tax bills after home values in the county rose by 10% on average this year.
The city's next fiscal year begins Sept. 1, and the changes will be presented to the City Council on Monday with a public hearing and vote scheduled for Aug. 26.
A second hearing would be held in September on accepting the windfall before a vote to levy the taxes, City Finance Director Brandon Kauffman said.
Final budget adjustments would be due to the state by October.
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