Budget briefing: commissioners review property-tax growth, BPU pilot cuts and possible new revenue options

The Unified Government received a detailed revenue briefing on May 28 as budget season advances. Staff reviewed property-tax projections, the Board of Public Utilities (BPU) pilot payment, sales and use tax forecasts, and several new revenue ideas.

Property values: Research staff presented a preliminary 4% increase in assessed value countywide, which—if the commission accepted the growth without changing the mill levy—would generate roughly $6.3 million across city and county levy funds (about $3.0M city, $3.3M county under current rates). Officials noted that accepting growth or exercising a revenue-neutral calculation will affect mill-levy choices and service levels.

BPU pilot payments: Staff noted the payment-in-lieu from the Board of Public Utilities is a significant city-general-fund revenue source (recently ~ $37–38M). Commissioners discussed prior policy choices that reduced residential pilot rates in steps; staff estimated that another 1% residential pilot reduction would decrease city general-fund receipts by roughly $1M annually, and that cumulative reductions over the last two years equate to approximately $2.6 million lost annual revenue. Finance said prior cuts were offset with expenditure reductions (frozen positions and other line-item adjustments).

Sales and use taxes: City combined sales/use-tax receipts were forecast at about $65M for 2027 absent one-time items; 2025 included a one-time Plaza at the Speedway payoff that inflated receipts. County sales/use-tax projections were also reviewed; staff forecast roughly $10.3M for combined county sales and use tax in 2027 under base assumptions.

New revenue options: Staff outlined possible revenue measures commissioners may consider: (1) dedicate a share of newly realized revenue when incentive districts end (a prior resolution suggested committing 50% of such receipts to property-tax or debt relief); (2) a new dedicated sales-tax increment (examples in packet showed a 0.38-cent rate might generate about $14M for the city, a quarter-cent about $9.9M); (3) a franchise/fee on nonresidential commercial solid-waste collection to address equity and illegal-dumping costs; and (4) raising DMV transaction fees (Senate Bill language would allow a local increase from $5 to $10 per transaction), estimated to produce $1.0–1.6M if fully implemented; those fees must be used for DMV operations.

Timing and next steps: Staff emphasized dates tied to the revenue-neutral calculation and budget calendar (assessor numbers due June 15; deadlines to declare intent to exceed revenue neutral in July and August; audit presentation expected late July). Commissioners asked for comparative jurisdiction examples, the attorney-general materials behind the planning reimbursement issue, a deep-dive on major expenditure drivers (personnel, fuel, benefits), and program-by-program priority exercises; staff committed to follow up.

Quote: Research manager Mike Grim summarized the property-tax projection: "Applying an estimated 4% appraisal increase, the combined city and county additional revenue is roughly $6.3 million," and finance staff noted the cumulative BPU pilot reductions required offsetting expenditure choices.

Editors' note: Figures are staff forecasts presented for budget deliberations and are subject to final assessor numbers and commission decisions about mill rates and other policy choices.