Kenner would give public employees a 3 percent pay raise and use $767,000 from its $6.8 million fund balance to help cover operating expenses in the coming year under the budget proposed last week by Mayor Mike Yenni.

The proposed $59.3 million operating budget for the fiscal year beginning July 1 is 3 percent higher than the current year’s. It estimates a 1.4 percent increase in revenue, to $61.5 million.

The budget for capital projects is $3.6 million.

“The city will have to continue to look for ways to increase revenues to meet the city’s needs and to be able to balance the budget without having to continue to use the city’s fund balance,” Yenni said in a letter to the council, which will begin hearings on the budget later this month.

Yenni noted that last year the city took $800,000 out of its fund balance, or reserve, and also used an additional $800,000 from the capital projects budget to cover operating expenses.

The new budget’s proposed $6 million fund balance at the end of the year would keep the fund at the city’s goal of 10 percent of the operating budget, he said.

The pay raise would apply to municipal employees, police officers and firefighters, with 2 percent of the firefighters’ raise mandated by the state.

Yenni, who makes $72,500 per year, said he once again will forgo expense allowances for the mayor and urged other elected officials to do the same.

His salary and those of City Council members are expected to be considered separately through a revision to the city’s charter, which would be done by popular vote.

Councilman Keith Reynaud proposed a resolution last month calling for raises for the elected officials of at least a third, though he agreed to table it. The council will create a committee to decide what will eventually go on the ballot.

Yenni wrote that after $8.5 million in budget cuts during his first term, which included eliminating 135 positions, there were no cuts left to be made in the city’s various departments.

He said the projected modest increase in revenue is based on a slight increase in sales tax collections, forecast to total $11.7 million, and an expected jump in permit fees as construction on the new north terminal at Louis Armstrong International Airport gets underway.

The budget forecasts $3.9 million in revenue from licenses and permits, up by about $500,000 from the current year. Most of that increase would be in building permits, where revenue is expected to more than double, to $860,000.

The capital budget, which is funded primarily by riverboat gambling, hotel-motel taxes and revenue from bond issues, includes drainage projects and $214,665 each for the Rivertown and Laketown revitalization efforts.

Last year’s capital budget was only $2.8 million after the $800,000 was taken out to help fund operations.

Yenni said he anticipates the cost of health insurance for employees will decline, though pension obligations will continue to rise.

The budget projects the city’s contribution rates will rise by 1 percentage point each for the state pension funds for firefighters and municipal employees and by .05 percentage point for the policemen’s pension fund.