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For the fourth year in a row, the Common Council plans to dip into the reserve fund to balance the budget.

The proposal drew sharp criticism from some residents and from City Treasurer James W. Ashcraft Jr. Wednesday evening during a public hearing on the budget.

The reserve fund, which stood at $2,527,000 in 1996, will be whittled down to one-third that amount if the Council taps it for $650,000 next year.

The Council will vote next Wednesday on a proposed 2000 budget of $16,293,156, a rise of 2.34 percent from the 1999 budget of $15,919,884.

This would call for a 40-cent hike in property taxes, to $12.89 per $1,000 of assessed value, a 3.19 percent increase.

Mayor Kenneth D. Swan told 30 residents attending the hearing: "We have been fortunate to be able to run the city with less than a 1 percent tax increase in a number of years. Some department heads feel it's starting to bite us, because it's cutting into our fund balance."

Budget Director Richard P. Mullaney admitted that the $650,000 withdrawal would be "controversial" as he walked the Council and public through the proposed budget.

Ashcraft spoke against it.

"I believe it is inexcusable to utilize that fund balance to the extent this has been done," he told the Council.

Reviewing the history of the reserve fund, known as the "fund balance," Ashcraft said that in 1996 the state gave the city an accelerated payment of $1.3 million in aid. This boosted the reserve fund to $2,527,000, he said, but the Council has raided it every year, as follows:

In 1997, it used $258,000 to balance the budget.

In 1998, it took $471,000, he said, "because our expenditures exceeded our revenues."

In 1999, it drew $555,000.

For 2000, it proposes to take $650,000 from the fund, leaving a balance of about $850,000.

"Somebody asked me if I could live with a 7 percent tax increase," Ashcraft said. "My answer is yes, if the city had used the $1.9 million as it should have."

Mayor Swan defended the policy.

"Most members of the Council feel that a 7 percent property tax increase is too high," Swan said. "We'll discuss it. The Council accepts using the fund balance in this way. A state auditor is looking at it."

Jacob Kern Jr. of South Transit Street spoke against raiding the reserve fund.

"In other words," he told the Council, "we've been deficit spending. A business can't operate that way. How can a city?"

"We're getting in a hole," said another resident.

"The biggest thing is our indebtedness," said George Kugler of Gaffney Road. "The fund balance is dwindling. In another year or so, we'll need a 20 to 30 percent tax increase to keep going. At some place you're going to have to take a stand."

Ashcraft also warned that the water and sewer fund is shrinking.

Mayor Swan acknowledged there will be "definitely an increase" in the sewer tax next year.

Mullaney said the proposed budget projects a 2.05 percent increase in sewer expenditures, to $3,553,503. Revenues will be just $3,292,800.

The water budget will increase 2.84 percent, to $2,926,060, but this will be exceeded by revenues, projected at $2,999,100.

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