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    Home » Galveston council mulls $2.7 million budget shortfall | Local News
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    Galveston council mulls $2.7 million budget shortfall | Local News

    userBy userSeptember 18, 2024No Comments3 Mins Read
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    The city council this week plans to vote on a proposed budget that could include $5 million in new spending, but also consider a tax rate that raises no more money at a time when new construction and increased property values increased revenue by only $2.3 million.

    Such a vote would create a shortfall of about $2.7 million and might result in a hiring freeze, administrators said.

    Council members Thursday are expected to vote on a budget proposed at $509.1 million and a no-new-revenue tax rate.

    The council had considered a tax rate of 42 cents on every $100 of taxable property value, which would have raised enough money to cover the new spending, but has leaned into a 39-cent rate that would raise no more money.

    Meanwhile, collective bargaining agreements made last year with the police and fire departments guaranteed $3 million in new expenses.

    The no-new-revenue tax rate would drop taxes to 39 cents from the current rate of 40 cents, City Manager Brian Maxwell said. And July sales tax revenue took a $600,000 hit because of Hurricane Beryl.

    Approving the 39-cent tax rate and the increased spending might lead to a hiring freeze, Maxwell said.

    “The catch phrase here is no new revenue means no new expenses,” Maxwell said.

    General fund spending is 80 percent salaries and 20 percent other expenses, he said.

    “It’s things I can’t really change,” Maxwell said of the 20 percent. “It’s things like electricity and gasoline and insurance.”

    Health insurance increases for the upcoming year amount to $675,000. Administrators broached the idea of slightly increasing premiums and adding a small copay to insurance costs but council members rejected the idea, Maxwell said.

    The council will consider the budget and tax rate for the next fiscal year at a time when “no new revenue” has become something of a mantra.

    “That’s a very trendy thing to do now,” Maxwell said of no-new-revenue tax rates. “There are a few cities in the county that are doing it. But the cities that are doing it are having exponential residential growth.”

    A development both east and west of Interstate 45 has brought more than 1,900 new residences since it was planned in 2005 with an additional 4,400 expected.

    Some cities in Galveston County have seen a 10 percent increase in recent growth while the island has remained at about 1.5 percent each year, Maxwell said.

    Some developments are in the works but won’t be completed in time for the next fiscal year.

    Mayor Craig Brown said he’s encouraging all residents to either attend or watch online Thursday beginning at 9 a.m. as council hosts a workshop before the 5 p.m. meeting that calls for a vote. Both will take place at city hall, 823 25th St.

    “We’re going to have a lively discussion,” he said. “Each council member has been looking at alternative revenues and how to trim expenses.”

    Council members could approve the staff-recommended 42-cent tax rate instead of the no-new-revenue rate, Brown said. If no tax rate is adopted, the city by law will default to a no-new-revenue rate.

    If a no-new-revenue rate is adopted, city staff would then adjust the budget to meet the lower amount of income, proposing a new one at the October regular meeting.



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