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Mayor Henry agrees to seek smaller tax increase

Tuesday, October 16, 2012 - 12:01 am

Under pressure from City Council Republicans, Mayor Tom Henry agreed Monday to use part of a $75 million nest egg to balance the 2013 budget while seeking only half of his proposed 6 percent tax increase.

The mayor's new plan would use interest generated by the city's "Legacy" fund – created from the lease and sale of the old City Light utility – to avoid the full tax increase and help fill a $6 million gap in Henry's proposed $174 million spending plan.

Council Republicans who oppose the tax increase have pushed for the city to use some of the Legacy money, but Henry has repeatedly said he does not believe that money should go toward day-to-day operations.

"I was so adamant about not going into Legacy (money) that I didn't even look at the interest," Henry said, adding that he was still "very concerned about using Legacy for operating expenses."

Henry's administration also wants to keep the city's cash reserves, currently about $15 million, at a level that could fund 10 percent of the $140 million property tax-supported portion of the city budget in the case of an emergency.

The mayor's original 2013 budget proposal calls for the city to increase its total property tax collections by 2.8 percent, as allowed by the state, along with a "banked" 2.9 percent increase that was not collected for 2012.

The initial proposal would have increased the average homeowner's tax bill by about $25. Under the smaller increase, the average tax bill would go up by about $11, according to city Controller Pat Roller.

But even the reduced tax increase may face opposition from council Republicans. Council President Tom Smith, R-1st, said he would rather not raise taxes at all, arguing that the city should instead fill the budget gap using some combination of the Legacy fund, cash reserves and spending cuts.

“I really think council is going to go for no levy increase whatsoever,” Smith said. “I think there’s enough votes for that.”

On Friday, council members proposed roughly $2.2 million in cuts to the mayor’s proposed spending plan. Council will debate the cuts and take an initial vote on the budget Tuesday.