URBANA — The city's tentative survival of the Great Recession will be a key theme of Mayor Laurel Prussing's budget message on Monday afternoon, but now she says Urbana faces an "even bigger challenge."
The Urbana City Council will begin its review of the city budget when it meets tonight at 7 p.m. in the Urbana City Building, 400 S. Vine St., after Prussing is scheduled to hold a press conference at 1 p.m. to run down the details of the annual spending plan.
The city will launch into a new budget year on July 1, and council members are expected to approve a new budget in the coming weeks. A state law approved last year exempts Carle Foundation Hospital from paying property taxes this year, and the budget effect is expected to be profound as the hospital accounts for 11 percent of the city's taxable property.
"This effectively shifts Carle's property tax burden to all other businesses and residents of Urbana," Prussing wrote in her budget message. "It will increase tax rates 11% for all Urbana taxing districts and put us in a downward spiral, unable to compete for business and residents."
Prussing writes that "the Carle problem" does not bode well for the city budget.
"This is clearly an unsustainable situation for Urbana, and we will do everything possible to get the hospitals to pay their fair share," she wrote.
Otherwise, Prussing said the city is, once again, taking a "cautious approach for managing in uncertain times." While the worst of the recession appears to be over, city revenues are struggling to return to pre-recession levels.
Day-to-day operating expenses are proposed at 5.3 percent less than the current fiscal year, but the total budget — $73.3 million — is more than 25 percent higher than last year. The spike is primarily because of big capital projects like the Olympian Drive project at $7.5 million and the Boneyard Creek beautification at $5.2 million.
Costs like employee health insurance continue to rise — city officials are budgeting this year for a $344,060 spike, which represents a 15 percent increase. And as residents increasingly switch away from landlines to cellphones, a dropoff in revenue from a landline-based fee for the county's 911 dispatch center has shifted more of that burden to tax dollars.
There is some good news for revenues, though. Prussing wrote in her budget message that city officials expect income and sales tax receipts to grow during the next few years as the economy slowly recovers, and they hope that will spur growth in the city's property tax base.
She said the proposed budget achieves her and the city council's first goal, which is keeping the city's public safety workers employed.
Still, Prussing is keeping her focus directed on the Carle tax exemption.
"In order to succeed, indeed, in order to survive, we will need to get the hospitals to pay their fair share," she wrote.
The city council is scheduled for discussions on the proposed budget during its meetings Monday night and on June 3. Public input is invited at those meetings, or comments may be directed to the mayor's office.