Ashland City Budget

Property taxes to rise to help cover AFN debt

Increase dampened by other budget cuts

By Vickie Aldous
Ashland Daily Tidings

Residents will pay less out of their own pockets to cover the Ashland Fiber Network’s debt payments due to a decision by the Ashland Citizens’ Budget Committee.

The committee, made up of residents and the Ashland City Council, agreed to cuts — including eliminating $300,000 for an Ashland Civic Center remodel — that left $570,000 more in the city budget’s ending fund balance.

Lynn Thompson, a resident member of the committee, advocated using that money to help cover the bulk of AFN’s debt payments of $864,454 in the coming fiscal year, which begins in July. A committee majority agreed to that plan.

Thompson pointed out that, without using the excess ending fund balance money, property taxes would have to be raised by 51 cents per $1,000 of assessed value to cover AFN’s debt. That equates to $153 a year for the owner of a home assessed at $300,000.

By using the ending fund balance money, property taxes will go up by a smaller amount of 18 cents per $1,000 in assessed value, or $54 for the owner of a home assessed at $300,000.

Ashland Finance Director Lee Tuneberg told committee members there is flexibility to use the extra ending fund balance money.

“But it’s not the way I’d like to do the debt service long-term,” he said.

By using the one-time infusion of extra money, the budget committee will have to decide again next year how to cover AFN’s ongoing debt payments, Tuneberg warned.

In recent weeks, the city council had been discussing options for making AFN’s debt payments, including raising property taxes and adding a tax on utility bills.

The city refinanced AFN’s $15.5 million debt in 2004 with a 20-year bond, and so far, has been making interest-only payments. Interest plus principal payments begin in July 2007. Yearly debt payments will rise to $1.43 million in the 2009-2010 fiscal year and plateau at that amount.

The overall city budget rose from $88.33 million in the current fiscal year to a tentative number of nearly $100.24 million for the coming fiscal year. The number is tentative because the finance department is still double-checking the impacts of Wednesday’s decision. Most of that increase was due to additional spending on capital projects.

The overall City of Ashland property tax rate will be $5.35 per $1,000 in assessed property value, or $1,605 for the owner of a home assessed at $300,000. That amount includes the Youth Activities Levy, which funnels money for extracurricular activities to the Ashland School District.

The budget must still win final approval from the Ashland City Council, but the council cannot raise property tax rates above the amount set by the budget committee.

Staff writer Vickie Aldous can be reached at 479-8199 or vlaldous@yahoo.com.

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