Preliminary numbers are in and it appears Archer Daniels Midland’s valuation changes will negatively impact the city of Clinton’s budget to the tune of $1.1 million.
On Tuesday night, City Finance Director Jessica Kinser outlined a plan to shuffle money in the budget to cover the shortfall that will kick in July 1, the start of the fiscal year 2013 budget, as the result of the court-ordered drop in valuation.
Kinser said the majority of the solutions are short-term, one-time solutions that are not meant to extend beyond fiscal year 2014 and must be carried out before fiscal year 2015 as property tax relief measures are ushered in.
“The reason long-term solutions are not proposed is because of the timing of the start of the fiscal year,” she wrote in a memo to the council. “The time and thought and council support needed for long-term solutions should be well-researched and thought-out revenue proposals and/or restructuring proposals. This long-term discussion needs to occur in the near future in order to prepare for a budget discussion to begin in November and December 2013.”
She said the General Fund sustains the greatest impact from the reduction in valuation, which is added onto by the fact that the Emergency Fund Levy is directly transferred into the General Fund each year as required by state code, she wrote.
She said there is a surplus of $7,414 in the General Fund and there are known savings because of the bidding out of the animal impoundment contract. She explained the city had set aside $295,066 in a special revenue fund in order to save money for the type of situation the ADM valuation drop created. She is recommending all of that money be transferred back into the General Fund. She also recommends that the city transfer the $5,387 fund balance existing in the Emergency Tax fund to the General Fund as well.
She said two other revenue options include putting all campground fees into the General Fund and to increase the fire inspection fee. That fee currently is $25 and covers inspections related to liquor licenses from police, fire and Building and Neighborhood Services. She said $25 is not adequate to cover the services from the three departments. She recommends that the fire inspection fee be increased to $25 per entity, or $75, per liquor license inspection.
She also suggested eliminating the proposed communications specialist position that she wished to create, and to reduce the police department’s regular overtime and court time line items because of an agreed-upon accrual of comp time rather than paying straight overtime.
She said there also is a contingency of $245,617 built into the General Fund as part of the budget process and she is recommending that the council utilize most of the contingency to balance the General Fund.
Other funds also would bear some of the load: $52,748 would come from the Transit Fund, $16,840 from the Tort Liability Fund, $97,363 from the Municipal Fire and Police Retirement Fund, and $26,073 from FICA/IPERS, $199,769 can come from the Other Benefits Find and $172,690 from a combination of Debt Service and Local Option Sales Tax funds.
At the end of the presentation, the council voted 6-0 to send the fire inspection fee change proposal to the Internal Operations Committee for recommendation prior to the entire proposal coming back before the full council.
Council members said they were impressed with Kinser’s work and they were glad they had put a contingency fund in place a few years ago.
“It’s almost painless,” said Ward 3 Councilwoman Bev Hermann.” You found money.”
The Clinton School District also will be affected by the court-ordered adjustment that sent Archer Daniels Midland’s valuation downward. However, because the budget was created in case no allowable growth was approved by the state legislature this year, the board had published a rate of $17.02 per $1,000 of assessed valuation. The state actually will provide 2 percent allowable growth. In the end, property owners will end up paying $16.53 per $1,000 of assessed valuation, a dime less than they are paying now. The new tax rate will kick in July 1. No action was necessary by the board for the new rate to go into effect at that time.