Fayetteville may hold its tax rate steady at 2.99 mills for the new fiscal year in August. But with a projected 7.5 percent increase in ad valorem taxes because of increased property values, it still amounts to a tax increase.

Council members June 21 heard the first reading of the proposed FY 2008 budget, set to become effective Aug. 1. The second reading and a vote on the proposed budget is set for July 19.

The General Fund budget is proposed at $10,117,568, a 4.26 percent increase over the current year.

Sales tax revenues are expected to increase by five percent as are property taxes at 7.5 percent due to growth and reassessments, said Finance Director Lynn Robinson.

Meantime, city finance staff recommended maintaining the current 2.99 millage rate. The value of a mill is estimated at $892,334 based on the 7.5 percent increase, Robinson said.

“This is a frugal but relevant budget that meets the needs of a small community,” said Mayor Ken Steele, noting that 60.68 percent of the General Fund budget is allocated to police and fire services.

The total budget for all of the city’s 12 funds is $31.585 million, Robinson said.

Proposed new staff positions, all budgeted for six months, include three full-time firefighters, a public works facility coordinator, a part-time human resources administrative assistant and two police department employees, including a school resource officer and a support services staff.

Water and sewer is proposed to add three and one-half positions, including one stormwater position, one wastewater operator, a maintenance worker and one part-time customer service representative that would convert to full-time.

Firefighters and police personnel are funded through the General Fund, while public works staff will be funded through the Water and Sewer Fund. The part-time human resources administrative position will have split funding between the two funds.

Also included in the General Fund is a 4.25 percent Pay and Retention Plan increase.

Public hearings on the budget will continue on July 19, at which a vote is expected.

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