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Tough challenges ahead for city budget

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Posted on: June 8, 2013

The issues that challenge Hyattsville’s city budget are nearly universal: tax rates, retirement expenses and what to cut when there’s not enough money for everything.  Some decisions have been made that create the framework and other questions need to be resolved before the council can pass the budget for FY 2014, which begins July 1.

The six new members, seated on May 20, have plunged in and joined the four incumbents in tackling difficult issues. Joseph Solomon (Ward 5) estimates that by early June, they had already logged 16 to 20 hours of formal meetings, most of it related to the issues discussed below.

Tax Rate

First and foremost, in the May 20 meeting following the swearing-in ceremony, the new council voted by a narrow margin to keep the current real estate tax rate at .63 per $100 of assessed value. This will amount to a tax decrease for homeowners whose assessments have fallen. Councilmember Patrick Paschall (Ward 3) estimated at the June 6 meeting that the average Hyattsville resident will pay 10 to 13 percent less in taxes this year.

Lower assessments translate into a loss of tax revenue of over $1 million for the city. In subsequent meetings, some on the council questioned the wisdom of keeping the tax rate at the same level it’s been for nearly a decade. That rate, which is lower than some nearby municipalities, may be adjusted next year.

Obligations on Retiree Benefits

In addition to falling revenue, the current council faces the ongoing issue of expensive retiree health benefits, (or Other Post-Employment Benefits, OPEB) which are costly to the city and higher than those of similar communities. The city is behind in its savings for liabilities it is currently facing and liabilities continue to grow. At its June 3 meeting it appeared that the council was coalescing around two potential solution either of which would cut the annual cost from $972,000 to less than $500,000.

As councilmember Shani Warner (Ward 2) noted in the June 3 meeting, “Either one would be very much a compromise.”

The proposals (variations of which were described in the March HL&T), all envision reducing the level of benefits for future retirees, but deal differently with when employees would become eligible, whether spouses are covered, and which employees are grandfathered into the old plan. Paschall articulated a sentiment many councilmembers expressed when he said, “What I’d like best is grandfathering everyone in, but I don’t like how much it costs.”

Even when other specifics are settled, the question remains of how quickly to pay down current obligations that have accumulated over the past several years as the city has failed to fund its liabilities.

Mayor Marc Tartaro has been seeking movement on this thorny issue since he took office in 2011. He has advocated paying these liabilities over five years, though the budget he proposed has it being paid over eight years. The council is looking at budget implications of spreading the payback out over 10 years. Says councilmember Tim Hunt (Ward 3), “Making a decision on how we’re paying back past liability has to go hand in hand with our current situation.”

What may be cut

In any scenario, however, expenses across the city will need to be cut. “This year we’re looking at a difficult situation,” noted Paschall at the June 3 meeting, “We’re looking at a significant shortfall.”

As the impending deadline approaches, city directors will be presenting the council with proposed cuts in their departments at meetings throughout the month. Discussion on one such item, relatively small in terms of the overall budget, illustrates the complexity behind the compromises.

Department of Community Services Director Abby Sandel identified the cost of a traditional International Festival as one item to consider removing from the budget at the May 22 meeting. The West Hyattsville event (which was not held in 2011 and replaced by a poorly attended Handmade on Hamilton festival in 2012) was expensive for the city because its typical Saturday date meant the city was required to pay overtime for both police and public-works employees.

The initial suggestion to replace the event with a series of three less-costly outdoor film screenings met some opposition from that area’s representatives and some residents. A new compromise was introduced by Sandel at the June 7 meeting: to host the National Night Out Against Crime to Hamilton Street rather than at Magruder Park. Because this event is held in August cold won’t be a factor, and the established event with sponsors would save money for the city.  Sandel also noted that by closing the streets on a Tuesday rather than Saturday, it would require lower overtime costs for staff and less impact on the businesses there.

Councilmembers generally seemed supportive of this compromise, but like many other budget decisions, the final verdict is not in. Solomon and fellow new member Eduoard Haba (Ward 4) voiced strong opposition to losing the identity of the International Festival, suggested combining the best elements of both events rather than replacing one with the other.

The outlook is hopeful for the resolution of these issues. “We are a group with a positive working relationship outside the council chambers,” notes Solomon, adding that the respect the members holds for each other is also important.  “This makes it extremely easy to share and readily understand each others’ perspective.”




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