Proposed fire station drives 10.2% tax hike in Hillsboro
Staff writer
Hillsboro property taxes would rise 10.2% next year under a proposed 2027 budget. Nearly all the increase would go toward financing a new fire station.
Council members Tuesday set a Sept. 1 hearing on a proposed 40.990-mill city tax rate, up from 38.935 mills this year. The city’s revenue-neutral rate, which would raise the same amount of property tax as this year, is 37.189 mills.
The proposal is just below a 41-mill ceiling council members set in July while planning fire station debt.
About two mills of the increase would go toward debt payments, budget consultant Michael Webb said. Webb previously was interim city administrator.
“Really, that extra money is going towards the fire station, not towards other operations,” Webb said.
Although the city talked about mill rates in discussing its budget proposal, actual rates are not set until weeks after cities adopt their budgets and property assessments are finally adjusted.
The only official thing set at budget hearings is the dollar amounts of the tax money desired.
Debt payments are budgeted to increase from $929,461 this year to $1.15 million next year. A tax rate supporting them would increase from 5.308 to 7.304 mills.
General spending from property tax revenue would increase 6.7%, from $2.96 million to $3.16 million.
More than half the increase results from moving bowling alley finances into the general budget and accounting for pool expenses differently, Webb said.
The budget includes a 3% employee pay increase and assumes health insurance costs will rise 15%. Part-time police officers would go from $22 an hour to $25.
No new positions are proposed, although two existing jobs would become 32-hour-a-week positions with benefits.
Council member Jeff Jorgenson asked what the tax increase would mean for homeowners.
A mill costs $11.50 annually for each $100,000 of residential property value.
A roughly two-mill increase would cost the owner of a $160,000 home about $36.80 a year, or $3.06 a month.
Mayor Lou Thurston said the city’s levy had been 45 or 46 mills when he became mayor and had since declined as valuation increased.
“I’m not going to apologize to anybody for a second” for adding two mills if they are tied entirely to financing the fire station, Thurston said.
The city previously authorized up to $5.5 million in bonds for the station.
Overall proposed city spending is $12.15 million, compared with $12.17 million budgeted this year. Excluding transfers, spending would increase from $10.07 million to $10.48 million.
Assessed valuation is projected to increase from $24.58 million to $25.73 million.
Webb cautioned that water and sewer rates need further examination to ensure revenue covers expenses. Water brought in $1.2 million to $1.3 million last year against $1.4 million in expenses.
“I think it’s a good budget, but it’s a thin budget,” Webb said.
Council members unanimously set their budget hearings for 4 p.m. Sept. 1. Final adoption is scheduled for Sept. 15.
City council members voted Tuesday to authorize a construction contract of up to $4,475,105 and selected NF Construction of Marion as construction manager, subject to final legal review.
NF was the only company to submit a proposal. Requests were sent to four companies with experience working locally.
NF’s management fee will be 4.5% of construction costs.
The planned station will be about 15,000 square feet, with roughly 5,200 square feet of administrative and office space and 9,700 to 9,800 square feet in five bays. A second story is planned for possible future overnight accommodations.
Another $100,000 is planned for furniture, appliances and other equipment.
The city previously authorized up to $5.5 million in bonds for the project.
City attorney Andrew Kovar still must complete details and municipal-law changes to the construction contract before it is signed.