OLEAN – City residents would see a reduction in their tax bill under a proposed budget Mayor Linda Witte detailed Tuesday to the City Council. But they would have to pay more for their water and sewer service.

If the tentative budget ends up being enacted, taxes in the city will fall from $14.49 per $1,000 of assessed value to $14.20 per $1,000. The tax bill for the average home in the city, which is assessed at around $70,000, would drop from the current $1,014.30 to $994.

However, water rates would rise 7 percent, while sewer rates would increase by 5 percent. Residents would see an increase of about a dollar per 1,000 gallons of water used.

“Taxpayers will see a 2 percent decrease in the tax rate and an increase in water and sewer rates,” Witte said. “One important unknown is how much we have to contribute to the state pension program. We have included a 13 percent increase, but we don’t have the exact details, yet. Another unknown is potential wage increases that could come in negotiation with four different unions.”

Witte said the city budget would see employee benefits eclipse the $4 million point for the first time.

“We chose not to lower the property tax beyond 2 percent because there are so many parts of our infrastructure that need repair,” Witte said. “This will also make the 2-percent tax cap requirements and offer opportunity to improve lives and attract investment to our community.”

Some of the proposed capital projects include the purchase or repair of a vehicle repair lift at the city’s central garage and possibly filling of the tunnel under Route 417 that goes from War Vets Park to Bradner Stadium.

Revenues are expected to come from the increased water and sewer fees; an additional $205,000 is planned in sales tax revenue; and $950,000 will be withdrawn from the $5.7 million surplus account, mainly to fund projects to reduce the need for borrowing.