By Jennifer Eisenbart
Editor
As the City of Burlington heads into its annual budget process, the annual audit – and review of the tax incremental finance districts within the city – a depressing financial picture develops.
According to accountant Patrick Romenesko, the city’s $1.7 million fund balance is actually a deficit of about $300,000. The city’s infrastructure fund is operating at about a $1 million deficit – due to paying cash for projects – while revenues on utilities have come in about $1 million less than expected the last two years.
That, coupled with the fact new state laws will limit how the city can use its TIF payoff revenue in 2017 or 2018, means the city is looking at a tight financial pinch over the next few years.
Romenesko – and city Treasurer Steve DeQuaker – both said plans are in the works to address the shortfalls that currently exist. However, a much bigger problem appears to loom.
When the TIF districts close, the city will be feeling the brunt of very little new net construction – and the fact that the state is has limited tax levy increases.
In short, as Dave Wagner of the consulting firm Ehlers explained Tuesday night at the City Council Committee of the Whole meeting, the city budget will hit a wall in 2026.
It’s not unusual, Wagner said. Municipalities all over the state are feeling the tax levy limit pinch. As Mayor Bob Miller and Wagner both pointed out, the state government has pushed the budget issue down to the local levels – essentially limiting the amount municipalities can raise through tax increases but not taking into account costs rising over time.
“It’s not a pretty picture, guys,” Miller said.
When the TIF districts in Burlington close – TIF 3 in 2017 and collected in 2018, and TIF 5, the Aurora project, in 2021-22 – the city will receive a one-time cash infusion. Tax rates could also drop starting in 2018-19, but if they do drop, the city would lose that levy authority for the future.
But because, as Wagner explained, the state limits levy increases to net new construction, the city won’t have enough to cover expected operational increases of 2 percent each year.
“What it means is you eventually hit the wall,” Wagner explained.
While council members discussed what it would mean for the future, Alderman Ed Johnson asked if the city had done something wrong.
The short answer from Wagner was no. In fact, without the TIF districts performing positively, the city would already be in the red, he said.
Beyond expected operational cost increases – which could be funded by an operational cost referendum, meaning voters get a say in what their taxes would be – the city could also borrow money to handle infrastructure needs. The debt payments would have to be covered in taxes.
The city is also considering at three major projects – a new city hall, renovations to the library, and renovations or rebuilding of the community pool. Those costs would have to be approved through referendum as well.
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Burlington is dying because the taxes are outrageous! Areas with lower property taxes are seeing a boom in population and construction, which actually INCREASES tax revenues. Stop allowing the school board’s raping of the citizenry and Burlington will turn around.
As Da-Chief said, it is important to read the article before posting. Clearly Hamj did not read the article.
Annd.. Once again someone who did not read the article spouts drivel.
HamJ, did you read the article? Really? The City is limited in what they CAN tax by the state. This is happening to ALL municipalities all over the state. THIS IS STATE LAW.
Where, show me where BURLINGTON is high in Taxes compared to say Paddock Lake. Show us, we want to see it.
We are loosing students at BHS because OF the drastic CUTS to the school budgets. You probably don’t have kids and yell at those to get off your lawn when they go by.
Here’s a novel idea. Acutally get involved with your community. Break yourself away from FAUX news for a few minutes, put away your bombastic Rush Limbaugh headphones etc.. and actually get out and see what is going on.
It might open your eyes.
I love how despite all evidence to the contrary conversations about tax levies always seem to somehow gravitate to “school board’s raping of the citizenry” of some other sort of nonsense. This despite the fact that proportionately Burlington’s school tax levy has been lower than other municipalities in the area. While the issues facing both our city and school budgets are similar, there is no mention of school taxes being the issue for the city. Do us all a favor and reread the above article and quit beating that old school tax drum. Better yet get a new one. That drum is way out of tune.
Hey Duh-Chief. If you think that Fox News is “Faux” and the Rush Limbaugh is “bombastic”, then you must live in the same delusional world as Obama….
Funny Jay Tee, I’m a retired disabled US Navy Chief, Field Medic, Aviation Warfare Specialist with 24 years of service to our great country.
What you got?
I’ve seen the world first hand.
U.S. Army, 1970 – 1972, WW Vietnam Nam, Chief. You’re still delusional…