The proposed $42,506,050 budget is nearly $8 million less than the current budget. The decrease is largely due to a decline in the price of natural gas caused by the ongoing economic downturn, which has reduced demand. This has had a negative impact on revenue, which city staff has attempted to mitigate by reducing their budgets. Even with those reductions, both the utility fund and general fund portions of the budget are projected to be in deficit.
The utility fund projects revenues totaling $32,369,690 but expenditures of $35,973,190, leaving a deficit of $3,603,500. The general fund projects expenditures of $5,397,210 but revenues of only $5,031,050 leaving a projected deficit of $367,620.
On Thursday, council directed finance director Walker Gallman to use money from the city’s surplus fund to eliminate the projected deficits. For the general fund, Gallman said approximately $350,000 in surplus funds will be used to balance the budget. The general fund’s surplus totals $2,598,000.
Earlier in the day, council slashed $17,000 from the proposed budget of Channel 14-The Union Connection, the city’s public access channel.
In another bid to balance the budget, council authorized only a 1 percent cost of living increase for city employees. City employees usually receive a 3 percent cost of living increase.
City taxes will remain at their current level of 74.3 mills.
The utility fund includes $3.4 million in proposed capital improvements. Gallman said that if the city proceeded with all of these it would have to transfer as much as $3.6 million from the utility fund’s surplus. However, Gallman said plans are to delay most of the improvements and do only those that are necessary. With the delay of most of the projects, Gallman said he expects only $500,000-$700,000 in surplus funds will be needed to balance the utility budget.
The utility fund has a surplus of approximately $6 million.
Also helping to balance the utility budget will be increases in sewer and natural gas rates and in water and natural gas tap fees.
Council approved a 10 percent increase in sewer rates which is projected to generate approximately $150,000 in additional revenue. Gallman said that with the increase a residential customer within the city who generates 4,500 gallons of sewage a month will see their monthly bill increase by $2.97. Residential customers living outside the city will see their monthly bill increase by $4.45.
The increase in the natural gas rates is still being determined by city staff. The proposed increase will be presented to council for consideration at a budget session on April 27.
Though water rates will remain the same, the tap fees will be increased from $350 to $450 for a 3/4-inch tap; $425 to $650 for a 1-inch tap; $625 to $850 for a 1 1/2-inch tap; and $2,500 to $3,000 for a 2-inch tap. Utility director Joe Nichols said told council that the increase will allow the city to recoup the cost of installation which it is unable to do under the current fee schedule.
The new natural gas tap fees will be $275 for a 3/4 inch service line and $350 for a one-inch gas service line. Currently, the city does not charge for the first 250 feet of a connection and only 50 cents a foot for each foot over 250 feet.
Surplus funds will also be used to help balance the budget of the solid waste management fund.
The proposed budget projects $879,190 in expenditures but only $588,500 in revenues leaving a deficit of $290,690. The budget will be balanced with a $130,000 transfer from the general fund and surplus funds.
The city charges a $12 monthly fee for garbage collection, having cut the fee from $15 last year. A $1 increase in the fee would generate approximately $49,000 a year. Council, however, declined to increase the collection fee.