What to Do with $1.4 Million in Excess City Funds?
Picking up on a thread from a couple of weeks ago —
There was general agreement at the January 28 council meeting to return money to taxpayers, something around the unanticipated $653 thousand we got from Montgomery County last year. I expect the council will vote, in the spring, to use the funds to hold down the FY14 tax rates. The council had discussed a mid-year tax rebate, but the city attorney found that this would not be allowed by state law.
The total in excess FY13 (July 1, 2012-June 30, 2013) city funds was $1.4 million, however, currently being held in reserve. It is likely the council will decide to dedicate some of the balance to mid-year programs and to do some mix of three things with the rest: 1) continue holding money in reserves, 2) dedicate funds to early pay-off of city debt, and 3) deposit funds toward the city’s unfunded pension liability. On pensions, in particular, we have been annually paying in the actuarially required amount, but our unfunded liability is significant, making extra payments desirable.
The choice will depend in large part on the FY14 (starting July 1, 2013) financial picture.
We should know by February 15 what the FY14 “constant yield tax rate” is. The CYTR is the rate, applied to the FY14 taxable assessed base, that would generate the same revenue as the city took in in FY13. The city’s FY13 rate is $0.58 per $100 assessed value. But the FY14 assessed base will likely decrease by something like 5-6 percent due to lowered assessments. This would mean an increase in the FY14 CYTR to something like $0.61. To hold the rate at $0.58 — which Mayor Bruce Williams sees as desirable, and I agree — if we don’t have excess revenues, we’d have to draw from reserves rather than paying down our debt, adding to pension funding, or using the money for new/expanded programs.
Regarding spending, I believe a majority of the council favors a trial of Sunday afternoon library hours. I floated the idea of a community-service coordinator, to help connect seniors, at-risk youth, disabled, and disadvantaged residents to county, state, and charitable services. I can’t say this proposal was enthusiastically received. Nonetheless, I will be fighting for at least seniors funding — to support organizing a Takoma Park “village” structure — even if the council won’t support full community-services support coverage.
The council will see how the CYTR shapes up, and maybe what state & county funding prospects look like, before making any decisions on city tax rates, expanded spending, and paying down city debt early or putting extra into pension funding. Of course, I’ll keep constituents posted.