Question: Can the City Manager provide a recommendation for the use of additional revenue beyond the 1.0 cent recommendation he presented with the proposed budget? (City Council)
Response:
At the March 12, 2024, legislative meeting, City Council set the maximum real estate tax increase to be considered at add/delete at 4.0 cents and directed the City Manager to provide a recommendation for the use of revenue beyond the 1.0 cent recommendation he presented with the proposed budget. The 1.0 cent recommendation included:
- $3.4 M to reduce borrowing and debt service costs to address future cost pressures on the City and ACPS operating budgets and CIPs, such as future cash capital and debt service increases required to fund the current CIP; ACPS and/or other City employee collective bargaining agreements; the local share of future State teacher pay increases; middle school capacity needs; expiring ARPA, ESSER, and grant funding; local and regional transit funding needs; and the potential for continued stagnant revenue growth.
- $1.0 M to fund potential City employee classification analysis and adjustments as identified through position studies conducted regularly on a four-year cycle.
- $165,000 for youth safety and resilience initiatives.
- $100,000 for one specialized Sheriff’s Deputy position.
For council’s consideration, with an additional 1.0 cent in tax revenue, the Manager recommends the following:
- $3,455,000 for ACPS teacher support
- $600,000 to extend the ARISE guaranteed basic income through the end of FY 2025
- $180,000 to restore the DASH line 104 bus service reduction in the proposed budget
- $465,000 to increase elderly and disabled real estate tax relief as displayed below
With the addition of $3,455,000 for teacher pay, the increase in the approved City operating transfer to ACPS would be $13.8 million, or 5.3% over the FY 2024 approved budget.
In addition to the $3,455,000 for teacher support in staff’s recommendation, City staff observed non-teacher compensation items in the ACPS approved budget that the School Board could consider reallocating to teachers. Items like leave payout incentives, retention bonuses, and new positions could be reprioritized by the School Board to shift some of these funds to the ACPS’s stated top priority for teacher pay. While these items are important, if the most critical need is for teacher salary adjustments, we would recommend that the Board shift funding that is already in the proposed budget to teacher pay that would cover the additional 2% cost of living adjustment for teachers.
Attached is some additional information related to ACPS comparison with other school divisions in the region that can be instructive in this year’s budget. Attachment 1 shows the employer funding support for health plan premiums. As the table shows ACPS is at the top of the share of healthcare costs covered by the employer. Attachment 2 shows the current comparison of average teacher salary. Attachment 3 shows the employee compensation changes since 2021 to the present as it relates to City and ACPS compensation. It should be noted that attachment 3 shows both city employees and ACPS employees did not receive a merit increase in 2021. One of the primary reasons for this was the loss of revenue due to the pandemic. The loss of revenue to the City, which covers the compensation for ACPS and City employees, was between $60-$70 million. While our economy has recovered to account for this revenue, the loss of revenue growth has not been made up since 2021.
Beyond a 2.0 cent recommendation above, staff recommends that any additional rate increase beyond 2.0 cents be used to reduce borrowing in the short term and provide additional revenue to address potential future funding needs as described in the first 1.0 cent option.
Attachments:
Attachment 1 – Semi-monthly Healthcare Premium Cost Sharing
Attachment 2 – Average Teacher Salaries
Attachment 3 – City-wide Pay-scale Adjustments