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Budget shortfalls more than expected

September 30, 2002|by SCOTT BUTKI

scottb@herald-mail.com

Hagerstown Finance Director Alfred Martin told the Hagerstown City Council on Friday that projected city budget deficits for the next few years will be at least $300,000 more than expected.

To address future budget shortfalls, the council reached a consensus during a budget retreat Friday to consider imposing a fire impact fee on new residences and raising the real estate tax rate.

The city is also delaying filling some job vacancies and may defer some capital projects, Martin said.

Before the council adopted a $25.57 million budget in June, the Finance Department estimated the city would face a $678,368 shortfall for fiscal 2003, which begins July 1.

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On Friday, Martin projected the shortfall will be closer to $1 million. He projected the city will finish the current fiscal year with a $447,407 deficit.

Martin projected a deficit of $1.9 million in fiscal 2004 and $2.5 million in 2005.

The financial picture is looking more bleak because revenues from city personal property tax and state income tax have been less than estimated and there are additional budget expenses, Assistant Director of Finance Ray Foltz said.

The projected budget for the next fiscal year includes $20.9 million for employee compensation, a 6.1 percent increase over the current budget.

The projection includes a 2.5 percent cost-of-living increase for all city employees as well as step raises - based on experience - for some employees. The step raises are 1.5 to 2 percent.

This year's budget includes a 2.5 cost-of-living increase for all employees. Union workers have not received that increase because the city and the four union employee groups have not agreed on new contracts.

Unless it wants to make a dramatic cut in services, Councilman Lewis Metzner said, the city is going to need to raise taxes to balance the next budget.

The council discussed increasing the real estate tax rate by about 1.5 cents, which would raise $270,000, Martin said.

For homeowners whose properties are assessed at $100,000, the increase would add $15 to their annual tax bills, Martin said.

At the suggestion of Councilman Kristin Aleshire, the council asked Martin to explore the possibility of imposing an impact fee on new residences, with the proceeds paying for firefighting expenses.

The fee would help the council with a goal, stated Friday, of hiring two new firefighters next year at an estimated starting annual cost of about $90,000. The projected $1 million deficit does not take into account that $90,000, Aleshire said.

Aleshire said he thought the impact fee should be about $500 for a single-family house, $750 for a townhouse and $1,000 for apartments.

During the meeting, Economic Development Coordinator Deborah Everhart said she has talked to local developers about planned residential developments and there are an estimated 2,347 residential units expected to be built in the city during the next 10 years.

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