City Administrator Fox Simons presented the budget during a budget workshop Monday afternoon.
The city will hold a public hearing on the budget, and vote on its first reading, during its next council meeting, slated for 7 p.m. Monday, May 9 in the courtroom of the Law Enforcement Center.
The city’s proposed total budget, including the general funds, special revenue funds, enterprise funds and debt service funds is $15,259,038, representing a decrease of three and a half percent from the 2010-2011 budget.
Under the proposed budget, Easley’s millage rate will remain the same at 58 mils. The budget also contains no increases in business licenses or building permit rates.
The budget does not include furloughs, layoffs, pay reductions or reductions in force for city employees.
It does eliminate four full time vacant positions and one part-time position, Simons said.
Those positions were eliminated as they became vacant as employees retired or left, he said.
The budget creates no new positions, Simons said.
The budget predicts that general fund revenue will be $11,648,633, or 3.55 percent less than FY2010-2011’s general fund revenues of $12,077,721.
Simons said the city is anticipating another 14 percent in cuts to State Aid, in addition to the 14 percent cut in State Aid absorbed by the 2010-2011 budget.
Since 2008, the City of Easley has been hit by $234,700 in reductions in State Aid.
Simons said that $234,000 figure would pay for 5.5 fulltime police officers or firefighters.
The city is projected to receive $345,000 in State Aid — a level of state aid not seen by Easley since 1996.
In fact, the city is giving more to the state than it is receiving back, Simons said.
“Last year, we became a ‘donor’ city,” Simons said, adding the city has remitted more in fees and fines to the State of South Carolina than it receives back from the city.
“And we do all the work,” Simons said. “They don’t do anything except cash the check.”
Simons said the gap between the amount the city sends to Columbia and the amount it receives from the state “will get bigger and bigger” until state aid figures return to previous levels.
The general revenue comes from a variety of sources including $3.1 million in licenses, fees and permits, $1.8 million in franchise fees and $2, 724,178 in taxes.
“It’s a very diversified revenue stream, which is a good thing,” Simons said. “We’re not too dependent on one sector. A lot of cities get too dependent on one thing, like sales tax — like the state, you’re so tied to sales tax that when it goes down, you’re in a pickle.”
Simons said that decreases in general fund revenue are being offset by increases in building permits and business licenses, including revenue from construction and contractors at Easley Town Center and projected revenue when those stores open.
In addition to the Super Wal-Mart, which opened last month, a number of other stores are set to open in Easley Town Center this year, including Kohl’s, slated to open at the end of August, Five Guys Burgers, a dental office and more, Simons said.
While the proposed budget includes $306,000 draw down on the city’s fund balance, the fund balance remains strong, Simons said.
“We have a very, very healthy fund balance,” he said.
The fund balance is 34 percent of the proposed FY 2011-2012
“Anything over 30 percent is considered very, very healthy,” Simons said. “We’re very fortunate.”
That strong fund balance provides the city with cash flow and is also used to pay bills, eliminating the need for the city to issue Tax Anticipation Notes.
The city’s strong financial outlook played a role last year as the city sought to refinance its bonds, Simons said.
“We had a lot of banks competing because we’re a very good client,” he said. “They like to see that fund balance.”
Although the tornado that touched down in Easley last fall did not compare to the those of recent weeks, if it had been catastrophic, the city’s fund balance would have been drawn down to pay for cleanup and repairs, Simons said.
Under the budget, Simons proposes to use that $306,000 for “one-time items”: $140,000 for a new leaf/vacuum truck for the Public Works Department, $50,000 for a new brush truck for the Fire Department and $16,000 for repairs to Station 1.
$100,000 of that draw down has been set aside for a proposed employee compensation program.
That program, which the city implemented last year, would give all full-time city employees a one-time incentive payment of $500 or 1.5 percent of the employee’s pay rate, whichever is higher.
The bonus would be given around Thanksgiving, in time for the Christmas shopping season, Simons said.
The proposed incentive payment sparked a debate among council members.
Councilman Dave Watson said that the city should consider forgoing the bonus and instead give all employees a one percent pay raise across the board, in order to bring the city’s pay scale more in line with other municipalities.
“We’re going to wake up in a couple of years and everyone we’ve got is going to be on the low end of the scale and we’re going to be scrambling to get them up to where they need to be,” Watson said.
Mayor Larry Bagwell asked Watson if he’d be willing to raise taxes to give employees a raise.
Watson said no.
“But if we can pay a one and a half percent incentive fee, we can pay a one percent raise permanently,” Watson said.
Bagwell said the city instituted a one percent raise several years ago and that other cities are not giving pay raises to employees this year
“At least we’re giving somebody something,” Bagwell said of the incentive payment.
Councilman Chris Mann said the city undertook a salary study several years ago and brought many employees at least to the average pay grade of their position.
But Police Chief Danny Traber said the majority of his police force are below the midpoint of pay grades as compared to other areas.
“Have we just not kept up?” Mann said. “Even before the economy just completely tanked, we weren’t keeping up with where we should have been.”
“That’s fair,” he said. “We can’t continue to keep doing this. It is a concern going forward, no doubt about it. Is this the time to do something about it?”
Giving a one percent raise might not get the city’s pay scale to where it needs to be, Simons said.
“I don’t know if that’s the answer,” Simons said.
“There’s no way we can raise taxes for a pay raise,” Mann said. “So what do we do?”
Watson said the city could institute raises over time to bring the pay scale in line.
Councilwoman Kim Valentin asked if department heads could come up with a way to cut further so that a raise could be given.
Bagwell said he didn’t want to put that kind of pressure on department heads and that he couldn’t support such a move.
“There’s no way I will ever vote for an employee to go through their budget and cut out things so they can get a pay raise,” he said.
Simons said the incentive is coming out of the fund balance — raises would have to be paid from the city’s general fund.
The city’s tax rate is “very low when compared to a lot of our peers,” Simons said
If you own a $300,000 home, you’ll pay just $331 in city taxes, Simons said.
The city has excellent police and fire response time and an ISO rating of 4 and provides residents with weekly garbage collection, recycling and yard debris pick-up, Simons said.
“You get an excellent value for your tax dollar living in the city of Easley,” Simons