BY KAREN J. RILEY – Higher expenses and a flat tax rate will likely translate into leaner times for the Hyattsville city government in the next year.
Preliminary briefings by staff suggest that the 2012 budget will include little room for new spending on city services. In fact, the need to address deferred capital improvements will require some budget cuts next year, predicts outgoing Mayor Bill Gardiner.
Key factors in the city’s tight fiscal times include steeper debt service payments and much higher benefit costs — including an estimated 5 percent increase for health care insurance and a whopping 63 percent increase for worker’s compensation insurance —from $130,000 to $630,000, Hyattsville City Administrator Gregory Rose told the city council on April 18.
At the same time, he said, a flat economy means that tax revenue is little changed, despite the expected influx of new businesses. In 2012, the city expects to collect $15.8 million in revenue compared to $15.3 million this year.
Both the real property tax rate and the personal property tax rates will remain unchanged at 63 cents per $100 in assessed value and $1.15 per $100 in assessed value respectively.
“Despite the negative outlook, Hyattsville appears to be weathering the storm better than many communities, in part due to the significant pre-recession growth in the tax base,” Rose said. “Nevertheless, the financial crisis requires careful planning to balance the slowdown in available resources against required expenditures and long-term investment.”
Indeed, the need to repair Hyattsville’s aging infrastructure is one perennial budget constraint. The city has been “playing catch-up” in capital improvements over the past decade, Gardiner told the HL&T, but more needs to be done. For 2012, Hyattsville officials are considering transferring about $1.7 million from the general fund – which pays for day-to-day expenses – to the capital improvement fund to pick up a portion of the $6.2 million proposed for refurbishing city parks, roads and facilities.
All told, city officials are proposing a $3.1 million increase in capital spending over 2011. Some of the largest capital improvement projects proposed for 2012 are the University Hills street reconstruction and improvements to 40th Place and Crittenden Street, which Public Works Director Patrick Ryan told the council was “easily the worst road in the city.”
Shifting money from the general fund to the capital improvement fund means that the city won’t have to borrow as much. The proposed budget calls for $2.6 million in new borrowing, with most to come from bond financing.
But achieving a balanced budget under this scenario requires some budget cuts and little in the way of new spending outside of capital improvements, Rose said.
The permanent adoption of once-weekly trash pickup means that two public-works driver positions can be eliminated. But unless cuts can be found elsewhere, adding positions some have suggested, such as human resources manager, deputy treasurer and part-time recreation coordinator, might not be feasible.
Other sources of potential budget savings are more painful, like no cost-of-living increase for city workers (although there is some council support for a 1 percent increase)
Nevertheless, a few noteworthy new expenditures are under consideration, including:
- One new police officer
- Additional parking meters (which may be financed via bond issue),
- Speed cameras
- Streaming of city council meetings
It will all be sorted out later this month. Incoming Mayor Marc Tartaro, currently representing Ward 1, is scheduled to introduce the 2012 budget to the Hyattsville City Council on May 23.
His ongoing concern, expressed at recent council meetings, is the lack of sufficient focus on the city’s long-term budget needs and his concern that current projections are too optimistic.
“You are assuming numbers only in one direction,” he said. If they’re wrong, “it gets ugly really quick.”