The city of Dunwoody is reducing its 2021 budget by about 4% due to the COVID-19 pandemic’s economic impacts. The city proposes keeping the property tax rate the same for now, but says that might have to change if revenue troubles continue.

The current property tax millage rate is 1.74 for homestead properties and 2.74 for other properties.

“While having this low a tax rate has been a matter of pride for many years, the city must revisit this decision, especially in light of reductions in businesses licenses, commercial property values and hotel/motel taxes,” a city memo reads.

The City Council on Oct. 26 approved the $24.5 million budget, which spans the calendar year.

The city says the pandemic has reduced the revenue from the commercial tax base. The city relies on commercial taxes to keep property taxes at lower rates.

In August, the city also cut the 2020 budget by 4%, or $1 million, to cope with losses in revenue. Due to that belt-tightening, the 2021 cut means a net reduction of about 0.12% from this year’s spending.

“Revenue looks more like 2011 than what we would have expected in 2021,” City Manager Eric Linton said in a press release. “Reductions occurred in almost every department. However, reductions were done through an internal line-by-line review process and not by across-the-board cuts.”

The city is expected to end 2020 with six months of reserve funds and end 2021 with four months of reserve funds, according to a city memo. The city is starting the year with about $4.5 million less than in 2020, a drop of about 21.4%, according to city documents.

While there is a 2021 reduction, the budget includes a 2% cost-of-living pay raise for city employees, effective April 1.

That pay hike came about after the final health insurance budget dropped premiums by 2 points to a 7% increase.

The council also moved $50,000 out of the Citywide Traffic Signal Communication in Public Works in the capital funds budget to fund the Master Plan of the old Austin Elementary School site.

Mayor Lynn Deutsch said in a press release the budget is balanced because of the city’s reserve funds.

“That is what they are there for — to help when disaster hits,” Deutsch said in the release. “However, this budget is the warning sign that our revenue base is fragile. Moving forward, the City Council and I will continue monitoring the situation and studying options.”

Deutsch and city staff submitted the proposal to the city Budget Committee for review at the end of August. The committee kept the budget mostly the same but made a few minor changes, including eliminating two printed quarterly “Dunwoody Digest” publications in favor of online-only versions.

–Erin Schilling and Bob Pepalis