Though staff members are still in the process of finalizing the proposed budget for city council during next week’s budget sessions, Gallman said general fund revenues are declining due to the state of the economy. To offset this decline and balance the budget, Gallman said Mayor Harold Thompson has directed department heads to find ways to reduce their budgets. He said the reductions request by Thompson may be achieved through:
• Postponement of equipment purchases.
• Reductions in overtime.
• Attrition of the city’s work force including the elimination of two School Resource Officer positions achieved through downsizing the program by the Union County School District.
“These are hard economic times and everybody is going to have to pull together to get through it,” Thompson said. “We’re not as bad off as a whole lot of places. We’re not having to cut jobs, we’re just asking our department heads to cut spending. Things like overtime, postponing equipment purchases unless they’re absolutely necessary. We’re not actually getting rid of any positions.
“The two SRO positions are going away because of the school district’s decision, not ours,” he said. “The officers, however, will remain with the public safety department.”
Gallman said staff will also propose that any special projects except for a proposed community center will be postponed. The construction of the center is financed with funds from the insurance settlement the city received for the fire that destroyed the old Union High School and tax increment funds.
Another problem facing the city is uncertainty over State Aid To Subdivisions. Gallman said the city has been informed that it would receive $290,000 for fiscal 2009-2010. However, the exact amount is still being debated in Columbia making it difficult for the city to budget for the amount.
Despite the expected decline in general fund revenue, Gallman said city staff has no plans to propose a property tax increase. The city property tax now stands at 74.3 mills
The drop in general fund revenues is due in large part to a decline in utility sales caused by the economic downturn.
“During our current fiscal year we are experiencing a decline in sales,” Gallman said. “The decline in sales is due to industrial customers either closing their plants or curtailing operations. The decline in sales, as well as a lower gas price, reduces the franchise fee transferred to the general fund which will affect general fund revenues for fiscal year 2010.”
Gallman said the franchise fee is projected to decline by $165,000 in 2009-2010 from an estimated $1.8 million for the current fiscal year.
Water and sewer
While the utility department has been asked to find ways to reduce expenses, its ability to do so is complicated by the fact that the city’s water and sewer systems are old and in need of constant maintenance. To continue to provide that maintenance and offset the city’s revenue losses a sewer rate increase will be proposed to council, Gallman said.
Unlike electricity and natural gas which generate much of the utility department’s revenue, Gallman said the city loses money on sewage. He said this will continue occur even if the proposed increase is approved by council, adding that the rate will still be one of the lowest in the state.
There are no plans to ask for a water rate increase.
The city’s residential natural gas customer base has continued to grow over the past year but its industrial customer base has declined. To offset this decline, an increase in the natural gas base rate will be proposed. If approved, this would be the first increase in the base rate since 2004.
Gallman said recent upgrades have left the city’s electrical system in excellent condition. He pointed out that because of the power generation facility the city built on Times Boulevard it has not had to raise electricity rates since 2003.
Gallman said the staff will propose council continue the “Purchase Power Adjustment” that allows the city each month to “true-up” the amount it paid for power the previous month. He said that depending on the cost of electricity, a customer’s bill could decrease or increase from month to month.
Staff will also propose increases in all utility fees including tap fees and an increase in the monthly charge for security lights.
The budget sessions will be held from 9 a.m.-5 p.m., Tuesday and Wednesday.