By DAVE HAMRICK
Staff Writer

A tax cut is in store for Fayetteville residents if City Council approves the proposed fiscal 2000 budget.

Council conducted first reading of the document Monday and will vote on its adoption this coming Monday. The meeting starts at 7 p.m. at City Hall.

An estimated 7 percent growth in the value of taxable property in the city can fund the proposed $6.9 million general fund budget and leave room for a tax reduction of five hundredths of a mill, said city finance director Lynn Raven.

A mill is one dollar per $1,000 of a property's assessed value. A .05-mill tax cut will reduce taxes on a $100,000 home by about $2 a year. But city officials are hoping to do better than that, if the estimate of 7 percent growth in the tax digest proves to be conservative.

State officials are expected to approve Fayette County's tax digest near the end of the calendar year, and officials are hoping that the growth in property value will allow a tax cut of as much as a fourth of a mill.

The city currently taxes local property at 2.77 mills for its general fund, plus .75 mills for capital projects, for a total of 3.47 mills, yielding about $138.80 on a $100,000 home (minus homestead and other exemptions).

Mayor Mike Wheat said this year's targeted reduction may not be much, but gradual reductions each year since 1994 have reduced taxes on a $100,000 property by about $100 a year, almost half of the city's taxes. The city's tax rate in 1994 was 5.97 mills. The goal, he added, is elimination of property taxes altogether, replacing them with sales taxes, business license fees and other types of taxation.

“Clearly, the city's services have improved,” Wheat said, adding, “The staff has done a great job” of carrying through on the City Council's stated goal of tax reduction.

“It's important to have goals,” he said.

If adopted by council, the general fund budget will see an increase of 8.47 percent over the 1999 spending plan, said Raven. Included in the document are plans to add six new employees to the city payroll, including three in the Public Works Department.

Salaries overall are expected to increase by 3.9 percent through a combination of merit pay increases and the city's longevity incentive program.

In addition to the general fund, the city's water and sewer fund is expected to generate $3.3 million in revenue and $2.7 million in expenses, with the remainder saved for future capital improvements. The city's water and sewer systems are funded through fees for water and sewer as well as “proportionate share” fees paid by developers to cover additional capacity needed for their developments.

The city's impact fee fund is expected to grow by $233,100, with only $9,050 in budgeted expenditures. But numerous capital projects are waiting for state and federal approval or other bureaucratic hurdles, and all the money will be spent in good time, said Raven.

The .75-mill capital projects fund will generate $266,198, and other sources will provide an additional $13,202, for a total of $279,400 to be used for repairs to city facilities, plus a variety of downtown revitalization programs under the Main Street Fayetteville. Two-thirds of the capital projects fund is dedicated to Main Street projects.

Total of all budgeted funds is $10.7 million.