PALMER – By a 3-2 margin, members of the city council approved a negotiated increased tax rate of $0.6895 per $100 valuation to fund the city’s 2011-2012 budget.

Voting against the new rate were council members Lance Anglin and Dianne Drewery.

The council first considered a motion to ratify the proposed budget reflecting all final changes made during and following the two pubic hearings prior to Tuesday’s regular meeting. Two public hearings were held as required due to the increased tax rate and tax revenues reflected in the proposed budget.

City Attorney Larry Jackson instructed the council members and staff, “This is a provision in the local government code that is required that the budget and any changes must be ratified by the council.”

Without any discussion, the motion to accept passed with Anglin and Drewery casting nay votes.

The next step in determining the city’s 2011-2012 financial plan was to approve the proposed budget.

Again, with only a motion to accept made and seconded, the budget was approved as presented by a 3-2 split. Angin and Drewery again cast the no votes.

After announcing the next item for the council to take action to adopt an ordinance for the city’s tax rate to increase, Anglin asked the council to reconsider any rate increase.

While commending City Manager Doug Young and the council for making progress in the city, he suggested adopting a smaller rate increase.

Anglin said he would be open to meet the council half-way on any increase other than the proposed $0.6954 percent.

Mayor Kenneth Bateman entered the discussion saying this is the first tax rate increase since 2006 when the current $0.6262 was approved.

“We need to keep making forward steps,” he said.

During the discussion, Young was asked if there  was any “fluff” that could be taken out. Young replied, “What fluff do you want to take out?”

He continued telling the council part of the problem is due to decreased property values.

Young pointed out the problems in preparing the city’s budget include the issue of water and sewer rates do not generate enough funds to support their operation.

“In this upcoming budget year, $200,000 will come out of the general funds budget to operate the water and sewer systems. It is simply my position that we need more revenues,” he said.

Young also told the council that the city must meet its debt payments that account for about 66 percent of  the budget.

“If we make any cuts in revenues, it will have to come from the maintenance and operations funds,” he said.

Entertaining Anglin’s suggestion to “meet half-way,” Councilman Jeff Vick proposed some suggestions of lowered rates and percentage increase.

Finally, the motion was made to accept the lesser of the proposed rate of $0.6895 instead of the earlier proposed $0.6854.

The council approved the motion setting the new proposed rate.

Other action before the council included hearing and approving projects and commission seat nominations for the Palmer Economic Develop Commission.

Making the presentation was Commission President Mark Varsel.

After describing projects the commission provided to the city, he asked the council to consider the commission purchasing approximately 31,000 square feet of land from the railroad.

The land that fronts Main Street and the town square currently belongs to the railroad. Varsel explained they own the land right up to the sidewalks, including where the gazebo is.

“Should we get the council’s approval, the PEDC will purchase the land at a cost of approximately $31,000 and gift it to the city. The council unanimously approved the proposal.

Varsel also asked the council to approve the nomination of two new commission members to fill two vacant seats. The nominees were Chad Newsome and Brett Witt.

Both were approved.