Saturday, May 17, 2008

Bosque Farms approves mill levy, gross receipts taxes

Clara Garcia News-Bulletin Staff Writer; www.news-bulletin.com

Bosque Farms The Village of Bosque Farms approved two tax hikes Thursday — a property tax mill levy rate increase as well as a municipal gross receipts tax increase.

The council agreed to raise both taxes as the village budget continues to be hit hard with increasing expenses and lower-than-expected gross receipts revenues.

With the approved increase of .25 percent in gross receipts tax, which will go into effect on Jan. 1, 2009, consumers will now pay 7.3125 cents on every dollar they spend in Bosque Farms. The current gross receipts tax is 7.0625 percent.

Gayle Jones, the village's clerk-administrator, said the village currently receives 1.4375 percent of the total gross receipts. Starting next year, Bosque Farms will get 1.6875 percent of the pie. (The county receives .6250 percent, and the state takes the rest.)

During a budget workshop two weeks ago, Jones told the council that the village would have to hold a special election so voters could decide on a gross receipt tax increase. During Thursday's meeting, she informed the council she was mistaken and that an election would not be necessary.

"After further research, I discovered that it does not require an election," Jones said. "The legislature passed a bill in 2007 allowing municipalities to increase their gross receipts tax."

While the vote to increase the gross receipts tax was unanimous, it was a different story when a vote was called to increase the village's property tax mill levy rate.

The current 2.225 mill levy rate provides the village with about $46,000 a year. Jones explained at a previous budget workshop that when a municipality imposes an increase, it won't go through a yield control formula set up by the state the first year and the village would receive 100 percent of the tax. The second year, however, it will go through yield control and the village will not be allowed to impose the full value — meaning taxpayers will see a gradual decrease starting at year two.

Jones explained that because yield control doesn't kick in the first year, the intent is to benefit the municipality. She said yield control is a very complicated system, but after running a scenario of increasing property taxes by 1 mill, it would increase the village's property tax revenue to $107,921 for the first year.

The vote was 3 to 1 in favor of increasing the mill rate by 1.25 mills up to 3.475 percent. Councilors Bill Kennedy, Robert Knowlton and Dolly Wallace all voted for the increase while Virgil Proctor voted against it.

Proctor told the crowd at the village council meeting that a property owner whose property has a net value of $62,000 will see a tax increase of $62.

"We've looked at all solutions how to come up with more funding, and this was not one I'd like to see," Proctor said. "I think there's more solutions, but they all take a lot of time. This is just going to help us this next year, and maybe a little the next, but this is not the kind of solution we need in the village to provide services that our residents want."

Proctor said that the mill levy rate increase is not a permanent solution, and it's something that would affect all residents. He suggested that the village look at other resolutions such as continuing to cut the budget.

Knowlton disagreed with Proctor, saying that the reason the village has a shortfall in the budget is because gross receipt revenues are down. He said while he expects gross receipts to increase, the property tax mill rate increase, which he says is a modest amount, is a viable solution.

"The only other option we have is take the money from our water and sewer fund and transfer into the general fund," Knowlton said. "We're doing that in order to balance the budget, and that means that those people who are hooked up to water and sewer are taking up the burden ... and those people who are not on water and sewer will not be taking up any slack."

During a budget workshop earlier this week, Councilors Proctor and Wallace said that neither of them was hooked into the village's water and sewer system.

Wallace said she too was in favor of the increase. She told the council that whenever the village takes money out of the water and sewer fund to balance the budget, it depletes the utility reserves that would help the village maintain the old system.

"We're going to have to have that money in place to do repairs, and possibly for matching funds for grants to continue to supply the village with the service," Wallace said. "The only other avenue we had in balancing the budget was do away with some services here, and we thought that wasn't in the best interest of the village.

"I feel that we're just taxed to death right now, but I just can't see any other way," Wallace added. "I don't want this to become something that we rely on every year, and we have to look at other avenues."

Mayor Wayne Ake said he too doesn't want to raise taxes, but that it's necessary.

"No one wants to do it, but we have to," Ake said. "It's just a fact of life — we're paying more for everything."

In other action, the council: