Annapolis Mayor Joshua J. Cohen introduced to the city council Monday night a $86.2 million operating budget proposal that seeks to raise several fees for city residents, in an effort to drastically increase the city's heavily depleted reserves.
The proposal is a 7.6 percent increase over last year's budget and allows the city to maintain its property tax rate and will result in a projected $2 million surplus.
The mayor proposed raising fees for water, sewer and storm-water management, as well as public bus fares by as much as 50 percent. Acknowledging the increases are "a lot to stomach," Cohen stressed the increases are necessities, as the city works to reverse recent downgrades in its bond ratings from two major financial companies.
"We find ourselves in a tough position," Cohen told the council and assembled department heads in his annual State of the City address, during which he explained his budget proposal. "We have choices for how we can address this responsibility. … My hope is that we address those liabilities head on, prioritizing replenishing the fund balance."
No layoffs of city employees are planned, but furloughs are still an option as the city is negotiating with union representatives. Last year, most city employees were furloughed up to nine days.
The push to replenish the city's fund balances will result in a nearly $10 million general fund balance in fiscal year 2012 — up from $4.1 million in the current fiscal year. The increased funding comes from a 50 percent increase in new property tax revenue, debt service savings of $2.6 million and an operating budget surplus of about $2.1 million.
The proposal would raise the solid waste fee by $46, increasing the annual fee to $426 per household. It would also raise the water and sewer fees about 75 percent. For example, a quarterly bill based on 250 gallons per day of usage would increase to about $220, up from $125. The city would increase by $40 annually the storm-water management fee for residents. For commercial property owners, the fee would increase from $150 to $500 annually. Also, the proposal calls for a 50-cent increase in the bus fare, with a goal of recovering 40 percent of its costs through fares. Currently, the $1 fare represents a 26 percent recovery rate.
This month, the city sold $36 million in bonds, which resulted in a $17.8 million in debt service savings. Despite that, two of the three bond rating companies downgrading the city this month, with Moody's moving the city down two notches on its rating scale, and giving it a "negative outlook."
Cohen said the city's other budget priorities include a "clean and green city," with an emphasis on increasing recycling, enhancing storm water remediation and stream restoration; revamping the city's transportation infrastructure through its parking facilities, a new downtown shuttle and the implementation of a bicycle master plan; and an increased focus on economic development, through about $450,000 in funding to the city's newly created economic development corporation.