With one meeting left in the year to pass the city’s mid-biennial budget amendment, which last week appeared to be a done deal, the city council Tuesday began discussing a new proposal designed to balance the city’s 2012 budget.
The administration has requested approximately $400,000 of fund balance to cover the gap next year, but Deputy Mayor Dan Swatman has said he is concerned about spending more than the city takes in and offered a new budget proposal that adjusts income projections and asks the administration to cut an additional $200,000.
Swatman praised the administration for the “outstanding job” they did in reducing pending, but said as councilmembers, they are the ones that approve the spending plan and he believes the city can find another $200,000 in cuts to reflect a new normal in budgeting.
“There could be areas where you say ‘This isn’t a priority anymore,'” he said. “I’d just rather have a balanced budget than anything else.”
Swatman closed the gap in part by increasing the assumptions on revenue. The administration factored in a minor increase in sales tax revenue for next year and then a 6 percent increase in 2013, a 7 percent increase in 2014 and 2015 and an 8 percent increase in 2016.
Swatman said he felt the amount for next year was low and applied a 6 percent increase across the board, which he said he felt was possible because all that was needed was slight inflation and slight growth.
Swatman’s calculations raised the estimated sales tax revenue from $3,519,306 to $3,730,464.
The additional revenue would cut the budget gap approximately in half. The rest would be achieved through cuts, though Swatman said he would leave it to the administration to find where those cuts could come from.
Most of the council agreed with Swatman in concept, but felt it was too late in the process to change the budget and also that the administration should be given a chance to save money like they did in 2011.
“We had a two-year plan we agreed to and they’re beating it,” Councilmember Jim Rackley said. “They saved $400,000 this year they were going to spend. That’s why I don’t want to mess with the biennial budget as passed.”
Rackley said beginning in 2013, he would like to see the budget balanced, but said using the fund balance in times of economic uncertainty was the right move.
“We knew these were extraordinary times,” he said.
The 2011-2012 city biennial budget was approved in Dec. 2010 and included a provision to use approximately $600,000 from the city’s fund balance to cover an anticipated gap between revenues and expenditures. The money was split into approximately $400,000 in 2011 and $200,000 in 2012.
However, due to budget cutting measures and higher-than-anticipated revenue, the administration expects to finish the year nearly $160,000 in the black, without the use of the allowed fund balance.
However, the administration has requested the council authorize approximately $393,000 from the fund balance to cover a projected gap in 2012, though they have stated their goal is to again not use any of the money.
Councilmember Dan Decker said he agreed with a zero-balance budget, but asked Swatman what he would cut and worried what it would mean for the city and for staff morale. Councilmember Donn Lewis also said he agreed with a balanced budget in the next cycle, but felt the budget should be left as proposed for now.
The council also discussed the possibility of a drop in state funding, expected as part of the state’s attempt to fill a budget gap of its own.
The budget also does not include $1 million that is expected as part of an agreement with Franciscan Health System to rebuild the intersection at Main Street and state Route 410.
The council is expected to pass the mid-biennial budget Tuesday during the final council meeting of the year. The public will have an opportunity to address the council before a vote is taken.
