During its May 3 work session, Town Council addressed the latest suggestions for reducing the town's real estate tax rate for the proposed fiscal year 2006 budget.
Currently set at 28 cents per $100 of assessed value, in his proposed FY 2006 budget Steve Owen, town manager, proposed a 1 cent reduction in the real estate tax.
Because most residents, and a majority of council members, have expressed they would like to see a larger decrease in the tax, council has deferred approving the proposed budget until further comment can be heard.
At its April 19 work session and April 26 public hearing, council heard public comments regarding the latest proposal by Council member Dennis Husch.
In his proposal, dubbed the "8-4-20" plan, Husch detailed how the town could cut expenditures and increase meals and transient occupancy taxes to reduce the real estate tax.
Husch called for the increase of the hotel occupancy tax from 6 percent to 8 percent and an increase in the meals tax by 4 percent from its current 1.5 percent.
This would result in an 8 cent decrease of the current real estate tax, dropping the rate to 20 cents per $100 of assessed value.
"They're projecting an 18 percent increase in real estate taxes for next year," said Council member Steven Mitchell. "We have to be very careful about the real estate [tax] rate because it does impact our out years and our budget."
Mitchell said although he does agree with eliminating some expenditures, he thinks the best way to decrease the real estate tax rate is to shift the tax burden.
He added that realistically, the town cannot afford to drop the tax rate by a large amount.
"We need to look at the clientele that comes into town," said Mitchell about the high number of work-related customers in town during the week. "They use our services that we provide and we need to reach out to them."
DURING THE WORK session, Mayor Michael O'Reilly discussed his submittal of a plan to generate more discussion.
A branch off of Husch's "8-4-20" plan, in an April 27 memorandum O'Reilly compared his recommendations to Husch's recommendations.
One difference was a suggestion to reduce the current real estate tax by 3 cents, to 25 cents per $100 of assessed value.
To do this, the mayor suggested increasing the cigarette tax from 35 cents a pack to 50 cents a pack, which would generate an additional $100,000 in revenue.
As an example, O'Reilly cited the town's 10 cent increase of the cigarette tax in FY 2004, saying because of that $104,000 in additional revenue was generated.
To bridge the remaining gap, O'Reilly suggested utilizing an additional $254,000 from the undesignated fund balance to fund the Worldgate Drive repaving project.
In relation to the possibility of raising the meals, transient occupancy and commercial utility taxes, O'Reilly said those are items that could be up for future discussion.
"I support having them 'on the table' for discussion," he said in his memo. "If they are not increased this year, I believe they should all be reviewed through significant discussion in preparation of the Town Manager's FY 2007 budget."
After hearing council comment, O'Reilly said he would like Owen to go through the memorandum and suggested cuts — his and Husch's — and identify which he could agree with.
From there he would like council to think about cuts they could support, and be prepared to potentially vote on the propose FY 2006 budget, with amendments, after hearing public comment at the scheduled May 10 hearing.