Officials say the City Commission faces a painful task in chopping $1.7 million from the 2012-2013 general fund budget before it’s approved.
Most of the city’s general fund pays for salaries and benefits, which increase every year, but revenue is estimated to remain flat, Finance Director Steve Dawson says.
The total estimated revenue for next fiscal year will be $31.4 million, while expenditures are estimated to be about $32.7 million.
“Basically we’re not getting any growth because, I think, of two primary factors – one is the state government is down (decreasing occupational taxes) and we gave up $300,000 of our revenue,” Dawson said during Monday’s City Commission meeting.
Occupational tax in the private sector is up about 3 percent, but the government tax is down about 5 percent, City Manager Fred Goins said about the income.
“It’s been very difficult this budgeting year because, as we forecasted last year, revenues are flat, especially occupational tax … from state government employees,” Goins said.
Collection issues for the ambulance fees and suspending the garbage fee are two other items Dawson says contributed to the stagnant revenue streams.
When drafting next year’s budget, department heads agreed to use other city funds to purchase snowplows, police cars and other capital project items, and they were able to trim more than $1 million to bring the deficit down to $1.7 million.
“(The budget is) a yearlong plan and we all need to be going in the same direction and fulfill the commitments we make when we agree upon a budget,” Goins said.
With staff suggestions, Goins presented discussion items that would result in cost savings for the city.
“We are faced with the decision of proposing to take a large amount of money out of the reserve or consider one of these or a combination these,” Goins said Monday night at the City Commission work session.
“And of course, like I said, none of these proposals are attractive things to do, but in lieu of making changes we would need to dip very deeply into our reserve fund.”
Goins’ list included:
>Reducing departments’ budgets by 1-5 percent.
“(A 5 percent) would be drastic to our departments and pretty hard to do across all departments,” Goins said.
Goins said each 1 percent cut could save the city $80,600.
>Declaring furlough days for all employees. Goins did not recommend the commissioners order furloughs because of public safety concerns.
“We can hardly furlough those guys – they’re vital.”
>Suspending use of Juniper Hill Park golf course for a year. The city could save about $334,000, but Goins did not recommend it.
>Suspending the Juniper Hill swimming pool for a season. The city could save about $130,000, but again Goins did not recommend eliminating the service.
>Suspending the summer sports program to save the city about $270,000. Goins did not recommend it.
>Cutting overtime costs. If the city eliminates all overtime pay it could save about $776,000, and if it cuts half, it could save about $388,000.
“The total amount of overtime is pretty striking,” Goins said. “However we’re back to a similar (public safety) discussion – it’s almost impossible to cut because of safety concerns.”
>”Browning out” a fire station. Goins said some cities are cutting back on hours that fire stations are open – sometimes shutting down for entire days. If the city shuts down the Holmes Street location for one day, it would save $2,474, but, because of public safety, Goins did not recommend it.
>Eliminating health care coverage of spouses who have other insurance options.
Goins said employers across the U.S. have adopted this policy to cut back on insurance costs. It could save the city about $233,000, and would not eliminate coverage of children. That is part of the staff’s proposal for 140 of the 209 spouses on the city’s plan.
>Implementing a “hard” hiring freeze – completely halting replacement hires.
It could save $300,000 in the city’s budget, but Goins did not recommend a “hard freeze” because it’s difficult to know who is going to leave.
“You might have several vacancies, leaving us deficient in a certain department or service.”
>Reducing agency requests by 25 percent. Goins did propose cutting contributions to charities hosting events in the city. The city could save about $91,000.
“We are supplementing the agencies quite a bit more than what it might seem.”
>Increasing the insurance premium fee by 1 percent.
With the 1 percent increase the city could save about $616,000.
Staff did not propose this item, but Goins said there has been an interest by at least a couple of commissioners for further discussion.
>Increasing the occupational tax by 0.25 percent in January.
“It’s my understanding that occupational tax hasn’t been increased for about 10 years, and when it was, it increased by 0.75. So this would be a relatively small increase to raise a relatively large amount of money,” he said. The rate is currently 1.75 percent.
The commissioners agreed to go into detail about the budget discussions during Monday’s voting meeting at 12:30 p.m. at the Municipal Building.