MERIDIAN — The Meridian City Council is considering a 2021 budget without a 3% tax increase allowed by state law.
After completing two budget workshops, the council will consider next week a proposed budget draft that it will agree upon and share with citizens ahead of public hearings later this summer.
During the workshops, which took place in June, council members agreed to consider a budget with no annual tax increase, a policy proposed by Mayor Robert Simison and city staff to provide property tax relief for residents. State law allows local governments to increase property taxes by up to 3% each year.
By forgoing that increase, which would total about $1 million in revenue, the city will fall about $600,000 short of estimated expenditures in next year’s budget. Projected revenue — which city staff described as a “very conservative” estimate — is about $53.5 million, while projected expenditures are $54. 1 million.
Staff recommended using savings, or the city’s fund balance, to account for the shortfall. The city has about $18 million in its fund balance.
Not increasing property tax rates would make the city eligible for CARES Act funding to help pay public safety salaries for 10 months, based on Gov. Brad Little’s plan to use $200 million for this purpose, an effort to give residents property tax relief.
Meridian intends to participate in the program. The deadline to inform the governor’s office of the intent to participate is July 17.
Councilwoman Liz Strader said during a June 30 workshop that, while she didn’t agree with the federal government’s economic approach to coronavirus recovery, Meridian residents should benefit from the funding if it’s available.
“We do have property tax-payers who are hurting very acutely in our own community, and they could benefit from this specific program,” Strader said. “I think it would be irresponsible not to give them the benefit of that.”
Councilman Brad Hoaglun said during the workshop that declining to take the 3% sends a good message to Meridian residents amid a difficult economic situation caused by the new coronavirus. Hoaglun said he is in favor of using fund balance to make up the difference in expenditures, although it gave him “heartburn.”
“We’re going to need those savings down the road, but it is within reason,” he said. “It works, and I can live with it.”
City staff recommended the council reserve the right to use the 3% increase in the future in the form of forgone property taxes. The city in 2022 could tap as a revenue source its forgone balance, which sits at more than $2 million, in addition to the annual 3% increase. However, using the forgone taxes would make the city ineligible for funding under Little’s $200 million plan.
Council members will continue to discuss the tentative budget at Tuesday’s city council meeting, when they likely will make final changes and publish the proposed budget for residents to review.
Public hearings on the budget, where residents can provide feedback before it’s finalized, are scheduled to begin Aug. 18.