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Duluth adjusts for $4M shortfall

DULUTH - Duluth has cut its proposed 2010 budget by $2 million and incorporated resident suggestions to generate $2 million more in funds to offset a $4 million revenue shortfall due to the economic slow down.

"When we started, I had doubts it could be done without a property tax increase, but we were able to do it," City Administrator Phil McLemore said during a budget presentation at Monday's Duluth City Council meeting. "This will be our 24th year in a row with no millage rate increase."

The council is expected to adopt a millage rate of 5.191 mills and pass the proposed $42.6 million budget at its June 22 meeting. The new budget would go into effect July 1.

As part of the budget process, the council encouraged city department heads to make deep cuts in their budgets and involved residents in suggesting ways to increase revenue. Employees are foregoing pay raises, and the city has initiated a hiring freeze.

The council adopted several recommendations made by a 44-member Citizens Budget Committee that include raising city Dumpster card fees, the price of garbage bags and park user fees for non-residents. A $30 municipal court fee increase that includes a $10 technology surcharge will be considered at the council meeting later in June.

The committee also suggested and the council agreed to use part of the city's reserve funds to balance the budget and use SPLOST monies to replace general funds for city projects wherever possible. This will still leave the city with enough reserve funds to cover operating expenses for three months.

Also, the council implemented a finance committee recommendation to offer employees cash incentives to seek outside insurance plans as a two-year pilot program.

Councilman Doug Mundrick cautioned residents that their tax bills may be slightly higher because the state has eliminated homeowner tax relief grants of $41.

The proposed budget does not include rent increases for merchants in the old city hall block, Councilwoman Marsha Bomar explained to several concerned business owners who appeared at the meeting. The possibility of raising the rents came up during budget discussions, and the council has asked city staff to study current rates, she said.