On the slate: June 6, 2006

The council agenda has come out. A few items of note:

  • PAAG may not get their million dollars back, but they’re going to “make the city pay,” so to speak, one way or another. In case you’ve forgotten, the Peoria Area Advancement Group, LLC (PAAG) “loaned” the city a million dollars way back in 1998 to explore the financial feasibility of buying Peoria’s water works from Illinois American Water. So confident were they that it would be affordable, they promised not to ask for the money back if a buyout wasn’t feasible. Once it was determined that it in fact wasn’t feasible under the criteria stipulated by PAAG, they decided they wanted their money back anyway. It’s awfully hard to part with a million bucks, especially when you didn’t get your way. Now they’re demanding arbitration over the matter to try to recoup their foolish investment, and the city is hiring legal help to rebuff them. Legal fees are estimated to be anywhere from $20,000 to $40,000 or more.
  • City Manager Randy Oliver is up for a raise. If the council approves, Oliver’s salary will go from $149,500 to $153,985 (up 3%). Here’s something curious: he also gets an “automobile allowance” of $500/month, which is also up for an increase to $575/month. I have no idea how much Mr. Oliver is required to drive for his position, but wouldn’t it be cheaper for him to drive a car from the city’s fleet? It doesn’t seem like a guy who makes over $150,000/year really needs an “automobile allowance,” does it?
  • That didn’t take long — just a couple weeks after Ferrell-Madden Associates suggested that a TIF district would be needed to revitalize the Warehouse District, here it is on the agenda for Tuesday night. Actually, it’s a recommended TIF (tax increment financing) district for the whole “Southern Gateway,” which includes the Warehouse District (to be rebranded “the Riverfront Arts District”), the River’s Edge Redevelopment Initiative, and the Eagle View Biotech Park. I predict this will elicit no small amount of discussion. After I have a chance to read up on the plans, I’ll write a separate post on this one.

The Tax Man

Over Memorial Day weekend, I took my family downtown for our annual lunch outing. I don’t know how it got started, but for several years now we pick a date in May to go downtown, eat at the pushcarts, listen to the “Arts in Education” groups that play in courthouse square, then go in and pay our property taxes for the year.

I know, that last part sounds like a downer, but because of the music and food, it makes the whole experience a little more palatable. This year we paid three times as much as previous years because we bought a bigger house last September to accommodate our growing family. It was the last day of the “Arts in Education” performances, and we heard a little of the Jazz All-Stars, but couldn’t stay long because there’s no shade where they were playing. We went over to the fountain area, which is surrounded by trees. There we sat in the shade and listened to the third grade class from Charter Oak School perform. They were really good — their music teacher is very talented and entertaining. You could tell he was having fun, and so were the kids.

After paying my taxes, it got me wondering how much property taxes contribute to Peoria’s income, and what those taxes pay for. So, I consulted the City of Peoria’s 2006 Budget, which is conveniently available online on the city’s website. I was surprised by what I learned:

Property taxes, which are projected to bring $20.9 million to city coffers, only account for 14.2% of the city’s total revenue. Of course, the city collects all kinds of other taxes, most notably a 1.5% sales tax which accounts for 15% of the city’s revenue. That’s right, sales taxes bring in more money than property taxes. The city also collects taxes on gasoline, utilities, and hotels/restaurants/amusements (HRA).

Where does the money go? Mostly for personnel costs. In 2006, personnel costs are expected to account for 75% of expenditures — that includes benefits, which are rising astronomically as we all know. In fact, between 2005 and 2006, benefits increased 15.9%, and benefits alone account for 24% of city expenditures. The city has 787 employees (I’m assuming this is when fully staffed), and that includes police officers, firefighters, public works employees, council members, and administrative staff.

They say you can tell a lot about a person’s values by looking at where he spends his money. If that can be applied to cities, then Peoria values public safety and public works. Police services account for 19% of expenditures, fire protection 13%, and public works 17% — that’s not including benefits.

It’s easy to criticize the city for not providing more police/fire protection, but the question always remains — how do you pay for it? What other services do you cut? What taxes or fees do you raise? This is why it’s easier to be a blogger than a council person, especially around budget time.