News

June 12, 2012

City creates "70 Cent" Committee in effort to eliminate debt service funding gap  

Contact:
Deb Dyar
515.965.6414
ddyar@ankenyiowa.gov

ANKENY, Iowa (June 12, 2012)– At a work session last night, Acting City Manager Jim Spradling asked the city council to establish an ad hoc committee to address the City’s debt service gap estimated at $1.6 million annually. During budget deliberations earlier this year, the City Council adopted a two-tier approach to address the debt service gap including a $0.85 per thousand tax levy increase to take effect July 1, 2012. The second scheduled increase, estimated at $0.70 per thousand, will take effect in fiscal year 2015.

“It was clear during this year’s budget deliberations that the Council was committed to reducing or eliminating the $0.70 increase,” said Ankeny Mayor Steve Van Oort. “Establishing this committee now provides the city council the opportunity to evaluate the impact of current and future revenue and spending decisions on the ability to close the debt service gap.”

The “70 Cent" Committee, the tax levy amount equal to $1.6 million, will be comprised of two Council members and the City’s budget team. Between now and the start of the City’s annual budget deliberations in December, the committee will evaluate conceptual approaches and forward the most viable options to the city council as a whole to consider and for the public to respond to. Potential strategies include:

• New non-tax revenue
  New tax revenue generated by valuation growth, not tax rate
• Use of specific fund cash balances to buy down debt
• Reallocation of general fund expenditures to other funds
• Reallocation of CIP projects to RUT fund
• Reduction of workforce through reorganization/consolidation, targeted early retirement/severance program, normal attrition and layoffs
• Reduction of capital improvement projects spending and capital equipment spending (adjusted replacement schedules)
• Reduction of discretionary spending
• Rebidding of service contracts: legal, banking, auditing, facilitation
• Reduction in service/program levels
• Reduction in employee benefits – Wage freeze

Spradling cautioned the Council about the difficulty in finding $1.6 million in additional general fund savings and the potential consequences to the community. The City has already cut over $2.5 million in the past 36 months and eliminated or deferred $42 million from the Capital Improvements Program.

“This goal can be achieved, but not without difficulty,” Spradling said. “There will be real consequences to the community and the City organization. Ultimately, the Council will have to decide whether closing the budget gap without a tax rate increase provides the most benefit to the community.”

Mayor Van Oort assigned Council Members Wade Steenhoek and Mark Holm to serve on the 70 Cent Committee and to provide regular reports to the city council and the public.  

###