There are several challenges facing Jamestown officials as they prepare to deliberate over the 2014 budget.
Today, Jamestown Mayor Sam Teresi will release his executive budget, which will then be looked over by the Jamestown City Council. The council has until Dec. 1 to adopt a fiscal plan or the executive budget will go into effect.
Prior to releasing the tentative budget, Teresi spoke to The Post-Journal about the challenges facing city officials as they work to finalize the 2014 spending plan. The mayor said the largest challenge is declining revenues for most line items.
"Revenues on every turn are under siege," he said.
He said the city is limited by the state on how to generate revenues. The main sources of revenue include sales tax, aid and incentives to municipalities, interest from investments and miscellaneous fees like licensing charges. Teresi said city officials are still waiting to know third quarter sales tax revenues, which will be updated in the budget once they are calculated.
As for aid and incentives to municipalities also known as AIM Teresi said the state aid system has been stagnate or decreasing during the last five years. He said the state revenue sharing system doesn't work the way it is supposed to either.
Revenues from interest are quite a bit lower than they were when Teresi became the city's mayor. He said when he took office in 2000, the city made around $400,000 from interest on investments. Now, he said the figure is around $25,000 a year. He said even with more money to invest, less revenue is being generated because of lower interest rates.
Other challenges in the city's budget are the same issues most municipalities wrestle with when producing an annual fiscal plan. Workers' compensation insurance, retirement system costs, health care and salaries increase each year. In the 2014 budget, Teresi said several scheduled retirements will increase appropriations even more. He said the city's retirement package includes payments like vacation and sick time for days not used by the employee.
"Sometimes this is more than the employee's salary," Teresi said.
Teresi said the city of Jamestown is faced with three tax levy caps. One is the state's property tax levy cap law that went into effect in 2011. Under this law, the growth in the property tax levy, the total amount to be raised through property taxes charged on the municipality's taxable assessed value of property, is capped at 2 percent or the rate of inflation, whichever is less. The mayor said because the rate of inflation is lower than 2 percent, the tax cap is 1.6 percent for the 2014 budget. This cap can also be adjusted for each individual municipality based on several factors from municipal bond debt payments to how much lower the city was under the previous year's tax cap. Teresi said the actual cap for the city in next year's fiscal plan is 3.1 percent.
The second cap is the city's constitutional tax limit. The constitutional tax limit is 2 percent of the average full valuation of taxable real estate for the preceding five-year period. The constitutional tax limit for 2012 was 92.2 percent. In 2011, it was 91.93 percent and it was 89.44 percent in 2010. The constitutional tax limit for the city is $13,475,621. The 2012 Jamestown tax levy was $12,242,946. This made the constitutional tax margin $1,050,675 after 2012.
The third cap is the one that has already been broken. Teresi said the third cap is what he calls the "citizen and business tax cap," which was hit several years ago. He said residents and businesses have let it be known to city officials taxes are already too high in the city.
"The people have said, 'Enough is a enough,'" Teresi said.