Butler's 2010 budget is set to include a 4-mill property tax increase to fund street repairs and a $600,000 tax revenue anticipation note to sustain its general fund until tax dollars begin arriving in the spring.

Butler City Council on Thursday night approved the preliminary reading of the $7.36 million budget, which will be finalized in December.

The 2010 budget is almost $500,000 more than the $6.87 million in this year's budget, attributable to an increase in the city's employee health insurance costs, which will jump from $733,000 in 2009 to $898,000 in 2010, as well as a $500,000 loan the council plans to take in late spring to fund street repairs.

The city intends to raise its debt service tax rate from 5 to 9 mills to pay back the loan over two years, increasing the overall property tax millage rate to 41.5 mills.

The total tax rate includes 30 mills for general purposes, 9 mills for debt service, 2 mills for recreation tax and 0.5 mill for the public library.

The city's resident tax will stay at $5 annually and the local services tax will stay at $52 per year.

One mill equals $1 in taxes per $1,000 in assessed property value, based on the 100 percent of the most recent 1969 assessment.

According to Ed Rupert, the Butler County director of Property and Revenue, the average assessment of homes in Butler city is about $10,000, meaning a 4-mill tax increase would translate to an additional $40 per year in taxes for the average city resident.

The city also intends to repeal its 0.3 percent earned income tax effective Jan. 1.

Departmental spending in the budget fluctuates only mildly.

Police department spending, despite a $39,000 increase in health insurance, will drop almost $40,000.

Major changes from 2009 to 2010 include drops in regular overtime from $78,000 to $62,000, body armor funding from $16,100 to $2,000 and the omission of a 2009 vehicle purchase costing $42,000.

The streets department's spending also dropped by $47,000 in 2010, due mainly to omission of a 2009 equipment purchase of $41,000.

The fire department's overall spending will increase by $50,000, due mainly to a $54,000 increase in health insurance premiums.

Spending for part-time firefighter wages are set to drop from $45,000 in 2009 to $20,000 in 2010, while pay in lieu of insurance gets a boost from $35,000 in 2009 to $49,000 in 2010.

The city will allocate about $162,000 of its $301,000 liquid fuels fund to winter snow removal, and another $59,000 from that fund for street construction and rebuilding.

The liquid fuels fund, as in 2009, will provide $45,000 for road and bridge maintenance and $34,000 for street sign and traffic signal maintenance.

The council also approved a motion to seek bids for a $600,000 tax revenue anticipation note to subsidize the city's general fund in January and February.

Mayor Maggie Stock said that after not taking a TRAN loan in 2009, the city's general fund balance dropped dangerously low before tax money started arriving in March.

"We don't want to cut our bank accounts that close again," Stock said.

"(The $600,000) was not just an arbitrary number," said city Councilman Joe Bratkovich. "The cash projections we did in researching the TRAN pointed to that number as what would be necessary to see us through."

City council will review any budget changes on Dec. 15 and then finalize it on Dec. 17.