Although Urbana continues to see improvements in its income tax, estimates from the city’s finance director show those gains will be offset by decreases in other sources of revenue.
Council members recently took an early glance of the city’s tax budget, a snapshot of the revenue that might be available for the next fiscal year.
According to information from Lee Williams, Urbana’s finance director, revenue from the city’s income tax has increased a little more than 3 percent, a projected increase of about $200,000. The revenue from the income tax accounts for about half the city’s budget. However, the city is expected to lose as much as $125,000 from the loss of estate tax alone.
“The 2011 to 2012 income tax rebound has improved the city’s financial outlook,” Williams told council members. “However, lower state funding, the phase out of the tangible personal property tax and the loss of the estate tax has had a negative revenue impact and has created a financial issue that all of us must continue to focus on.”
Overall, Williams said the general fund budget will be about $6.4 million this year. However, projected expenses will eat into all but about $20,000 of the general fund revenue. The city’s overall budget, not including federal or state grants, is expected to be about $13.3 million.
“We’re lucky that income tax is coming up because it’s offsetting the revenue losses,” Williams said.
The city has two budget cycles annually. The tax budget cycle, which occurs earlier in the year, provides an estimate of the revenue that will be available. The appropriations budget, which typically is discussed in the fall, provides an estimate of the city’s expenses.
The tax budget will have three readings before council members and must be adopted by July 15. It must be presented to the Champaign County Budget Commission by late July.