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City property owners could enjoy a zero property tax increase under a revised preliminary budget presented Monday to the City Council by acting City Manager B. Leonard Walker.

By using reserve funds, the proposed spending plan -- to be adopted in March -- would maintain the present tax rate of $7.68 per $1,000 assessed property value.

The proposed $19.6 million budget calls for an increase of 5.6 percent over the current $18.6 million outlay.

The city would make up the difference by dipping into reserve funds. The shortfall could also be offset in part by $600,000 that a new sales tax agreement with Genesee County generated in the second half of 2000.

Labor costs accounted for a 6 percent increase in spending. Numerous capital projects, some of them already delayed, could be included, Walker told the Council.

He said that residents will not tolerate any cut in services. In fact, many people want more, he added.

He also noted that the city's real property tax base is declining, having lost 1 percent in the past year.

The revision is a far cry from a doomsday scenario Walker presented to the Council last month. In that proposal, he said residents could expect a 28 percent tax increase unless the Council approved a water supply agreement with the county, which would increase city revenues by $300,000 a year. However, that does not include county lease payments for the city's water distribution system or a five-year agreement that would allow the city, for the first time, to collect sales tax revenues generated outside the city's borders. That increase could be at least $1 million a year on sales generated by Six Flags Darien Lake theme park, and two large discount stores just outside the city limits.

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