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Petoskey council mulls tax increase, OKs general budget cuts Various cost-cutting measures for Petoskey’s general budget received approval from the city council Monday. This portion of the budget covers programs such as public safety, parks and recreation and general government and administration. These reductions — projected to save up to $404,700 — would include wage and benefit reductions — by way of leaving vacant positions unfilled and seeking to lower overtime costs — along with cuts in spending on equipment purchases, education and training, contracted services, supplies, maintenance and repairs, utilities and capital outlays. Using the tax rate originally proposed, the current revenue projection for the general levy is about $339,363 lower than was expected a few months ago. Along with the cost-saving measures, staff are proposing that the general tax levy be adjusted upward by about .23 mill — bringing it to about 7.67 mills — which would restore about $109,000 in city revenue. The city’s various tax levies for the year are expected to be finalized in May. Advertisement Because of the property-value drop, city finance director Al Terry noted that revenues generated using the general levy would still be less than last year even with the rate increase in place. Other adjustments proposed to boost revenue include a 5 percent fee increase for parks and recreation program participants and higher prices for marina fuel sales — with staff noting that these would remain consistent with the local market. Small grants will be pursued in hope of funding some city purchases, and $50,000 in operating funds that would normally be transferred from the city’s electric utility to a street budget would instead be moved into the general fund. The tax-rate increase and other revenue-generating efforts are expected to produce about $189,000. Combined with the cost-cutting efforts, these would make about $593,000 available to address a revenue shortfall of about $361,000. Staff noted that the extra funds would allow for unforseen expenses and the possibility that some projected cost savings don’t come to fruition. Without the tax-rate increase, Terry said there’s a possibility that the city would need to look at staffing cuts. Another possibility which staff offered for the council to consider — re-establishment of an administrative fee on property tax bills that had been dropped about a decade ago — would generate more than $200,000 if collected at the maximum 1 percent rate allowed by the state and eliminate the need for the tax-rate increase, staff noted. With property-value declines expected to continue in 2011 and possibly 2012, city manager Dan Ralley noted that officials likely will need to have additional “difficult” discussions involving long-term financial strategies.