Council members spent the majority of their three-hour budget session Thursday afternoon going over proposals and scrutinizing the numbers to end up with a fiscal year 2010-11 budget more trim than any year prior.
“We’ve never had a plush budget,” said city finance director Walker Gallman, adding the city has consistently been conservative with its budget so trimming even more is a difficult task.
The city’s FY 2011 budget is projected to total $43,858,140 or $1,027,650 more than the $42,830,490 budgeted for the current fiscal year, an increase of 2 percent.
Gallman told council members on the opening day of its budget sessions Tuesday there are a number of factors contributing to the increase in the proposed budget and they are largely outside the city’s control.
They include a 2.9 percent increase in the Consumer Price Index, an anticipated 9.5 percent increase in health insurance costs expected to take effect Jan. 1, 2011, and a 6 percent increase in the city’s purchased power cost.
Since 2002, the city has seen either no increase or an actual decrease in city revenues, including State Aid to Subdivision, fines and fees, interest and property tax. Council members are looking at ways to make up a net loss of just more than $320,000 in the general fund, nearly $400,300 in the solid waste management fund and a nearly $3 million shortfall in the utility fund.
The continuing decline in city revenues is a problem that will have to be dealt with in the near future with either tax increases, cuts in spending or both, Gallman says.
He brought his recommendations and considerations to council members Thursday afternoon but said he and the city’s department heads need a few more weeks to recommend a full budget proposal for the next fiscal year. Departments currently are seeking ways to cut about 5 percent of their budgets and need a little more time to do so.
Several options were laid out on the table Thursday and council members also agreed it was time to reduce the amount the city spends on outside agencies. Like its own departments, council consensus is to cut outside agency expenditures by 5 percent or more, in some cases.
There are a few of those expenditures the city is under contract or bound by ordinance to fund at the price tags requested, but for the most part outside agencies likely will see a decrease in the amount of funding they receive from the city.
Council members also agreed it is time to move forward with possibly implementing a one-cent hospitality or accommodation tax within city limits. That additional revenue would generate around $100,000, conservatively, that could be used to fund tourism and economic development projects and agencies.
The council further agreed if that new tax was put in place it would like Union County to be its administrator since it already has one in place. If the county agreed, the city hopes those types of projects and agencies would be taken out of the its budget and put under the county’s authority — ultimately reducing the amount the city plans for outside agency funding.
Council members plan to discuss this option with members of Union County Council during a joint meeting between the two boards in early April. The council hopes to meet with its county counterpart as early as Monday, April 12.
Other ways Gallman told council members the city can fix its general fund loss include raising taxes. One mil would generate an additional $13,700 for the city. Gallman said Thursday 30 mils would generate about $300,000, essentially balancing the general fund budget.
He’s also suggesting raising other fees and possibly attempting to implement a local option sales tax but that measure would need to be placed on the November ballot and would be collected countywide.
Solid Waste Fund
To bring the solid waste budget in line, Gallman suggested leasing instead of purchasing a new brush truck. The option would spread the debt incurred to the city for the new truck over a period of several years.
Council members asked if the existing truck — which is 10 years old — could hold out for another year.
“You can always go another year,” said vehicle maintenance director Mike Petrie.
The question is whether or not that’s the most effective measure when the existing first-line truck should be the back up and the second truck is 20 years old, he added.
Leasing a new truck also could also allow the city to cut a position through attrition as the new vehicle would only require one person whereas the brush truck currently in use is a two-man operation. Petrie and public services director Perry Harmon also don’t expect to lease a new truck until the existing 2006 vehicle’s lease expires which won’t be until next year.
In the end, council members agreed it’s probably the best option to move forward on leasing a new truck.
Gallman also proposes increasing the city’s garbage fee by $1, which would generate an additional $49,000 for the solid waste fund, and suggested possibly charging for brush pick up. The solid waste fund, most likely however, will be balanced using prior year’s retained earnings.
Gallman is suggesting the city raise rates in several areas to help bring the utility fund back in line. Proposed increases — if approved — would affect water, sewer and security light rates.
The finance director’s recommendation as of Thursday is to increase the rate for security lights by 5 percent, which would equate to an additional 30 cents per light per month.
Proposals also show a possible 9.5 percent increase in water and sewer rates. The increase would generate an additional $300,000 per year for the city and mean an additional $1.26 per 6,000 gallons a month for water customers inside city limits and $1.92 for those outside the city. The increase would equal an additional $1.56 per 12,000 gallons a month for sewer customers inside the city and $2.34 for those outside city limits.
Gallman reported the city’s natural gas rates need to be raised 5 percent, but no recommendation is being made to do so for the next fiscal year. Electric rates also should remain the same for the next fiscal year and the finance director recommends continuing the city’s use of PPA and PGA to “true-up” the cost of both utilities each month.
Due to the loss of industrial load throughout the city’s utilities, consultants also have been asked to continue the study of all utility rates and loads.
Gallman also brought council members several other options it could consider in making a decision on the next fiscal year budget.
“These are just some of the things maybe we need to look at,” he said.
Those considerations included capping the transfer from the utility and solid waste management funds at their current levels, authorizing the mayor to look at alternative work schedules to become more efficient and provide better customer service, cutting the city’s fuel usage by 10 percent with each department head monitoring use and reporting back to the mayor and possibly combining building inspection departments with the county.
Gallman reiterated to council members all of his considerations and suggestions are merely proposals at this time.
He will come back to council with additional information during another budget work session tentatively slated for April 12 immediately following the city’s planned joint meeting with county council.
Once a proposed budget is finished, it will be brought back to council and a public hearing will be scheduled for members of the community to voice their opinion.
The budget then will require two readings before it is approved.