First Hearing on FY2013 Duluth Budget Monday

The Duluth City Council will conduct the first public hearing on the proposed FY2013 budget during its upcoming meeting at 7 p.m. Monday, May 14. The draft General Fund operating budget totals $20.4 million, a 6.5 percent increase over the amended FY2012 General Fund budget of $19.2 million.

City Manager Tim Shearer will present a budget summary at the hearing.

In order to balance the revenue and expenses in the General Fund budget, the city is having to use $3.7 million in prior year reserve funds, according to Duluth Budget and Accounting Manager Ken Sakmar.

The city is continuing to maintain a four-month reserve, about $6.8 million, he said, as recommended by citizens on the Advanced Budget Committee and previous Citizen Budget Committees that provided input on the budget.

“We’re still seeing a decline in property tax revenue,” Sakmar said. Some of the other revenues the city receives are down, while others are up, he said.

Another hearing and adoption of the budget is scheduled for June 11. The tax millage rate will be set probably later in June after the city receives and reviews its tax digest from Gwinnett County. “When we talked to the county about reappraisals,” Sakmar added, “we were told to expect a drop in property tax revenue in our digest.”

An anticipated decrease of slightly over $700,000 in property tax revenue has been budgeted for FY2013, he said.

“We also have one-time expenditures of at least $885,350 budgeted for FY2013,” Sakmar said. “This is part of the reason we’re having to dip into the [prior year] reserve funds.” Prior year reserve funds include any unexpended funds from the previous year’s budget plus funds from “better years,” he said.

The FY2013 General Fund budget also includes about $175,000 in contingency funds for the mayor and council to allocate for emergencies or unexpected expenses. This is down from $200,000 for FY2012.

The fiscal year 2013 budget goes into effect July 1, 2012, and continues through June 30, 2013.

Duluth’s complete FY2013 budget amounts to $73.5 million. This includes the General Fund, Capital Projects, Other Funds and Stormwater Utility Funds. Because the city’s budget is balanced, an equal amount of expenses are budgeted.

Capital Projects account for $50.4 million in FY2013 compared to $9.4 million in FY2012. The significant difference, Sakmar said, is the result of the city’s changing the way it budgets capital projects. Instead of budgeting for the cost of a capital project anticipated in a year, the entire cost for the length of the project has been budgeted, he said. “This allows the city to look at funds on a project basis – the entire cost of a project.” When the council decides on a project, Sakmar explained, they look at the total cost.

The amended FY2012 budget benefited from a one-time payment of $2.4 million from Gwinnett County as the result of the Service Delivery Strategy settlement, according to Sakmar. The FY2013 budget includes $972,808 in SDS settlement funds. The city will continue to receive payments from the county for five to seven years, he said.

Duluth taxpayers will see a drop in their tax bills of about 1.6 mills as a result of the SDS settlement, he said. This will amount to a savings of $125 to $130, for example, on a home valued at $200,000.

A copy of the draft budget is available for viewing at www.duluthga.net.