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'Free cash' to lower increase in property tax
J.J. Huggins, Sentinel & Enterprise, November 2, 2006

LEOMINSTER -- The property-tax increase resulting from the construction of the new library will not be as high as previously expected, thanks in part to "free cash" Mayor Dean J. Mazzarella plans to use toward cost overruns.

The City Council, at the request of the mayor, approved a loan order this fall to cover an additional $1.3 million for the new library across from City Hall.
The $1.3 million could have resulted in a $14 property-tax increase for the average single-family homeowner.

But that's not going to happen now, Mazzarella said.

"What we will do, through a variety of different sources, is we will take the $1.3 million and pay it off between seven and 10 years, and pay for it using some free cash," Mazzarella said during an interview Wednesday. "That will wipe out the $14."

Free cash is excess taxpayer money that is not earmarked for anything specific.
The city will put at least $130,000 in free cash toward paying off the $1.3 million loan this year, Mazzarella said.

Other funding sources might be used in subsequent years, he said.
Overall, the entire loan could be repaid in less than seven years, according to Mazzarella.

But despite the mayor's plan, residents will still see a property-tax increase because of the library, Mazzarella acknowledged.

The city council approved $7.8 million for the library in 2003.

That spending could cause the average single-family homeowner to see their property taxes raise by as much as $83.

But Mazzarella called the $83 increase "the worst-case scenario," and said he expects the dollar amount to be lower, on average.

The mayor said officials will also reduce the hit to tax bills by using free cash to cover the $400,000 in interest generated by paying for the entire library project.
Mazzarella didn't have solid figures on Wednesday regarding how much free cash the city has this year.

The city will use roughly $5 million in free cash to pay for a variety of projects between now and June 30 -- the end of the fiscal year -- Mazzarella said.

Mazzarella hopes to put the money toward fixing the roof at the high school, busing students to school, a new sanding truck, correcting a problem with the police and fire radios, snow and ice removal, overtime costs, upgrades to the Veterans' Center, new police cruisers and possibly another ambulance.
"There are things -- when things got tough and the state was cutting budgets ... we're rebuilding," Mazzarella said.

Mazzarella said he plans to give the City Council a copy of the spending plan, and they will have to vote item by item on whether to approve the spending.

Mazzarella touted his administration's ability to save money.

He specifically referred to the construction of Sky View Middle School.
"When we built Sky View, that project alone should have resulted in a 10 percent increase in the tax rate," he said.

But the city raised taxes by just 2.5 percent to pay for the school, he said.
"These are things we do all the time," he said. "We're looking to save people money, not cost them more."



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