Urbana’s city budget saw improving revenue as unemployment continued to drop, but a series of cuts to state funding will wipe out those gains, its finance director said.
City council members reviewed a resolution to approve the city’s 2013 budget projections last week, with a total general fund of about $6.3 million. While the city saw an increase in revenue through its income taxes, Williams said those gains were offset by a combination of three factors, including a decrease in local government funds from the state, the elimination of the estate tax in 2013 and the continued phase-0ut of tangible personal property taxes.
While the estate tax has fluctuated in recent years, for example, Williams said it has provided between $100,000 and $400,000 in revenue to the city in recent years.
Income tax revenue for the city has increased as the unemployment rate for the city dropped to about 7.8 percent, Williams said. Overall, income tax revenue accounts for about 50 percent of the general fund budget. However, the cuts in state funding negated those gains, meaning the general fund budget will remain basically flat, Williams said.
Overall, the city’s budget is a slight improvement from its recent low of about $6 million in 2009 and 2010. However, other costs such as fuel and materials for capital improvements have also increased.
“It’s not enough to write home about,” Williams said.
The city has two budget cycles each year. The tax budget, released in the spring, is an estimate of the revenue that will be available. The appropriations budget, which is being reviewed now, gives an estimate of the city’s expenses. When revenue from the city’s police and fire levies are included, along with other sources of revenue, the total city budget was estimated at about $15.3 million.
Council members will likely vote on the 2013 budget in mid-December.