Florissant Council Discusses Reducing Utility Tax Rate

members received good financial news and discussed reducing one a tax as a result.

During a Monday , Finance Director Randy McDaniel told the council that projected for the rest of the year, Florissant would come about $760,000 ahead of its budgeted utility tax receipts.

While putting together the 2011 budget, McDaniel projected the city would receive $5.7 million from the revenue. On Monday, he said Florissant likely would wind up with $6.4 million from utility taxes.

Through July, tax collection is $600,000 ahead of projections due to utility rate hikes and higher bills, he said.

The city raised the utility tax from 5 percent to 7 percent last year as the council struggled to balance its budget.

“I understand we have budget issues, but I’d like to look at decreasing the utility tax,” Ward 1 Councilman Tim Lee said.

McDaniel said lowering the tax by 1 percent would bring revenue down to about $6 million, still $300,000 ahead of projections.

Councilwoman Karen McKay, Ward 7, suggested lowering the residential rate to 6 percent but keeping the commercial rate at 7 percent.

“We pay our fair share of utility taxes as business owners, but I can also use them as tax deductions, whereas a resident cannot,” McKay, who owns a hair salon, said.

McKay pointed out that during the 1990s, city officials promised to lower the utility rate to 3 percent in return for the city passing the capital improvement sales tax. Although the tax was lowered initially, it was raised throughout the years back to 7 percent, the voter-approved maximum.

Refinancing Equals Energy Savings

The city also might save money by refinancing bonds due to the low interest rates available.

McDaniel and bond counsel Landon Baine of Piper Jaffray Cos. said the city can refinance bonds from its current 5.75 percent interest to 3.25 percent interest and would save the city about $1.3 million to $1.4 million in payments annually, McDaniel said.

Council members favored using savings on payments to finance a series of capital improvements suggested by Public Works Director Lou Jearls.

The city would use the extra funds to pay off the debt, leaving a savings of about $709,000.

In turn, city council members would use those funds to install more energy-efficient heating and cooling units at the and community centers, , , the government building and the .

Jearls projected the total cost at about $1,052,000.

The energy savings on the projects would pay for themselves throughout the course of five to 18 years, according to a document Jearls handed out.

The plan would include building a second salt storage facility at .

Jearls said payback on the facility is two years.

“It costs us two or three times more to buy salt during the winter,” he said.

“We save money two ways,” Mayor Tom Schneider said. “We save on the bond payments, and we save on energy.”

Charter Review

Council members discussed dates for the council’s charter review, how members might go about the review and hiring an independent facilitator for the process.

Schneider suggested that council members go through the charter, write out any changes they would like to see and discuss them together.

“Then, we can proceed with any that seem to have merit,” Schneider said.

The council also would consider changes suggested by residents.

Council President Keith English of Ward 4 suggested going through the charter in thirds, reviewing sections 1-5 during the first meeting; then sections 6-10 and 11-14 in subsequent sessions.

English asked council members to submit dates in early October when they could meet.

The last time the council reviewed the 50-year-old city charter was 1987.