Breakout graphic: What it means: The proposed 6.3 percent electric rate increase means the "average" residential customer who uses 1,035 kWh per month would see a monthly increase of $6.93 to a $116.90. Annually that increase amounts to $83.16.
Newton's proposed budget won't increase property taxes, sanitation costs or water and sewer fees, but city power customers can expect a 6.3 percent electric rate hike.
Fees and charges in the city's fire, police and recreation departments will also increase.
Meanwhile, the $40.7 million spending plan unveiled Tuesday includes a 2.5 percent cost of living increase for city employees. If approved, the proposed budget will no longer fund employee dental insurance, and it could increase health insurance costs employees pay for their dependents. The budget won't eliminate any positions.
Newton City Manager Todd Clark's proposed $40,673,450 budget for fiscal year 2011-12 represents nearly a 23 percent increase over Newton's amended budget for the fiscal year that ends June 30. At the end of the fiscal year, Clark expects the 2010-11 budget to amount to about $33 million, which is up $1.5 million compared to the budget approved by city officials a year ago.
"The proposed 2012 fiscal year budget is a conservative financial plan that will enable the city to continue providing a high level of service to citizens," Clark said in his budget message. "Additionally, the city staff has worked with the City Council to recognize needed capital and capital improvement projects that will benefit our citizens for years to come."
Much of the increase in the budget comes from $8.1 million in capital spending during the fiscal year ahead. Those investments are part of a five-year Capital Improvement Plan that City Council approved earlier this month. The first year of the plan focuses heavily in infrastructure rehabilitation for water and sewer lines.
"Operationally, we have held expenditures," Clark said. "The largest increase is due to capital projects. We have kept our operational expenditures as close as we possibly could for this fiscal year."
Other increases couldn't be avoided, Clark said, adding the budget plan includes an average 40 percent increase in fuel costs for the city's motor vehicles. Most of the increase impacts public safety departments, such as police and fire, but public works is affected as well, Clark said.
"It is just starting to hit us," Clark said, adding the city usually buys fuel quarterly so the latest fuel price increases will "hit" next quarter. "We are trying to be vigilant (about fuel conservation) and make sure people aren't letting their vehicles run. We have a 'no idling' policy, and the department heads are trying to watch that very closely."
A proposed 2.5 percent cost-of-living increase for all city employees will add $195,000 to budgeted expenses, Clark said.
"Regrettably, management has not been able to to recommend any type of pay increase for the last two years due to the constrained sources of revenue for the city," Clark said. "While conditions have not substantially improved, the city cannot afford to go another year without rewarding our employees for their service."
Clark said that three years ago, the city completed a pay and classification study, which provided varying degrees of salary increases for some employees, but not every city worker got a pay raise. Four years ago, Newton spent about $39,000 for merit-based bonuses that affected some city employees who received positive performance evaluations that year, Clark said.
Employees will also be affected by budget plans to make dental insurance optional. Clark said the city's health fund sustained "major" health events during the past year, and as a result, Newton is experiencing escalating costs to insure employees. To combat those costs, Clark's proposed budget will make dental insurance optional for city employees.
"Employees will be able to continue receiving dental benefits, but they will have to assume 100 percent of the premium," Clark said adding those premiums amount to $7.02 per week for a city employee.
The change will save the city $69,700 in the fiscal year ahead.
The budget plan will impact Newton citizens with a 6.3 percent electric rate increase, which Clark said is a wholesale rate increase the city will receive from its power provider and pass along to customers.
Citizens will also be impacted by increases to fees and charges in the city's police and fire departments. These increases will raise fines for parking violations as well as a variety of fire permit and inspection fees. The budget also increases costs for some parks and recreation programming, such as summer camps and the annual Soldiers Reunion run and bike ride.
The city's water and sewer rates will remain unchanged in the proposed budget. Property taxes, too, will remain at 48 cents per $100 valuation, even though, Clark said, the tax rate is below the city's "revenue neutral" point after the county's recent property reappraisal and revaluation.
That reappraisal produced a Newton tax base of $1.08 billion, which represents a decrease of more than $2.8 million in value, Clark said, adding the revaluation appeals process through the county is still ongoing.
By state law, units of local government must levy a revenue neutral tax rate in the budget following a reappraisal process. Newton's revenue-neutral tax rate is 50 cents per $100 valuation, based on the reappraisal of its tax base, Clark said.
To balance a decline in revenue from property taxes and other revenue sources, the budget relies on a $425,000 appropriation from Newton's General Fund Balance. As of June 30, Clark expects the balance of retained earnings will be about $2.4 million, which he said is well above the 8 percent benchmark for fund balance set by the state's Local Government Commission.
Newton City Council will hold public work sessions during coming weeks, beginning with a planned workshop Thursday at 5:15 p.m. in Council Chambers at Newton City Hall.