The Rye City Council approved a 2025 city budget on Wednesday night that will carry a 5.07 percent tax rate increase, reducing the city manager’s initial budget proposal by 1.05 percent.
This translates to an average increase of $259 in property taxes per household in Rye, down from the originally proposed $312 average increase.
Even with the cuts, the adopted 5.07 percent tax rate increase is still 0.39 percent more than the state-mandated tax-cap limit of 4.68 percent, which required the City Council to also approve a budget override. The tax cap, signed into state law in 2011, establishes a limit on the annual growth of property taxes levied — or the amount needed to be collected — by local governments and school districts to 2 percent or the rate of inflation, whichever is lower.
The tax levy is now $31,147,837, and the city budget is in excess of the tax cap by $116,161.
The total operating budget stands at $49.1 million. The new tax rate reflects $214.33 per $1,000 of assessed property value, according to Deputy Comptroller Joe Fazzino.
The unanimous vote came after six weeks of council deliberations, during which the council brought down the proposed tax rate increase in several stages.
In the end, to cut the tax rate increase to its final level, the council voted to raise residential building permit fees by $1 per $1,000 of estimated construction value. A change in the building permit fee structure to $18 per $1,000 of estimated value of improvement from $17 will result in an increase of $105,546 in revenue, according to City Planner Christian Miller. That fee was last raised in 2013.
Before raising the permit fees, city officials were able to trim the tax rate increase to 5.41 percent, because they originally had overestimated workers’ compensation expenditures. Those were expected to decrease by 5 percent, but actually dropped by 6 percent.
In addition, the city ended up with lower-than-expected city employee health insurance costs, which had allowed city officials to lower the tax rate increase as well.
City Manager Greg Usry’s preliminary budget in November had proposed a tax rate increase of 6.12 percent.
The council decided to table discussion of a proposal to increase hourly parking rates to $1.25 from $1. Council members are expected to resume those conversations in January.
If enacted in January, the increased revenue from parking would appear as a surplus of around $100,000 in 2025 but then be reflected as an increase in budget revenue in 2026, according to Fazzino.
“If we all agree that it makes sense to increase the parking fees to $1.25, the Rye taxpayer is going to benefit,” Democratic Councilwoman Sara Goddard said. “The question is whether they benefit this year or next year.”
Had the increase been approved with the 2025 budget, the impact would have been reflected in the 2025 tax rate, according to Usry. Instead, the additional revenue will contribute to a 2025 surplus and factor into the tax rate for the following year.
Councilwoman Julie Souza, a Democrat, expressed hesitation over increased parking fees, citing insufficient outreach to the Chamber of Commerce to gather input on how it would impact not only shoppers, but employees who pay for parking in Rye.
“The biggest irritation in the past was having the quarters. Now that it’s an app, it’s not an irritation, you’re using the app either way,” Councilman Josh Nathan, a Democrat, said. “So the real issue is whether we think 25 cents an hour is material to the public as they go downtown.”
Hourly parking rates have not been changed in 13 years, according to Republican Councilman Bill Henderson.
After previous consideration this month, the council decided not to cut the budgets of the police, fire, and public works departments.
Mayor Josh Cohn was absent from the Dec. 18 meeting.