Budget recap : Fayetteville finances will need to be re-evaluated next year
Posted on Tuesday, December 25, 2007
Fayetteville’s city budget for 2008 is workable, but doesn’t solve the city’s longterm financial issues. “ Do we have a workable budget ? Yes, we do. We’ve still got some problems that we’re going to have to grapple with, ” Paul Becker, finance and internal services director, said Friday. “ I believe we’re going to have to look at millage or some other type of increased revenue stream. That’s what I would forecast right now for 2009, ” he said.
60 / 40 The 2008 city budget approved by the City Council last week relies on a 60 / 40 operations / capital split — 60 percent of the city’s sales tax revenue will used for operations and 40 percent will be used for capital expenses.
In the past, it was a 50 / 50 split. That is one issue that council members have indicated they want to revisit in the next budget process.
Changing the split to 60 / 40 put another $ 1. 5 million into operations and removed it from capital.
“ If we go back to the 50 / 50 split, we’re going to have to make up $ 1. 5 million, ” Becker said.
That’s no easy task.
“ I’ve said publicly at some of these meetings, ‘ A million dollars (of sales tax ) is a hundred million worth of sales, ’” he said.
Another issue relates to deferring purchase of a fire truck for one year.
In a memo to the council he noted, “ This is not a permanent fix for our budgetary shortfall. It is a deferral of the purchase of capital equipment to a future period. ” A likely ongoing issue is that of the structured reductions in fire and police department manpower, for example, not filling positions where personnel are due to retire. “ Those aren’t permanent reductions in personnel, those are one-year reductions, so we’re going to look at placing them back in the budget in 2009, ” said Becker. “ These will be issues we need to revisit in 2009. ”
How we got here The City Council started discussing the budget in late September with projections of a general fund budget of about $ 35. 5 million for 2008. Also at that time, revenue projections were $ 33. 1 million. “ We had to cover $ 2. 4 million; that’s where we started, ” said Becker. City administration recommended the 60 / 40 split plus a millage of 0. 9 mills to resolve that $ 2. 4 million difference between expected revenues and expenses. The revised split put $ 1. 5 million into operations and the millage, had it been adopted, was expected to generate about $ 900, 000. However, the City Council decided not to adopt the millage which meant the general fund budget had to be reduced. The mayor and administrative staff, including Becker, made recommendations that subtracted $ 853, 000 from the budget. “ That’s where the discussion centered: Could we agree on the 60 / 40 split and did we want to stay with our proposed reductions ? ” said Becker. In its analysis of the proposed cuts, the council debated those they thought should and shouldn’t be made and asked city administrators to look deeper. “ We relooked at capital. The fire chief determined that he could delay, or defer, purchase of a fire truck for $ 311, 000, ” said Becker. That delay did not help directly because it was out of capital funds, not general funds. Becker told the council if they chose to defer the truck’s purchase and transfer the funds, some of the items removed from the budget could be restored. The City Council did that Dec. 18 in a line-by-line study of administrative recommendations. At that meeting they put money back into the then-proposed 2008 budget for reorganization of the cable and planning divisions; restored police part-time employees, park patrol and a K-9 unit; restored half the money for Gulley Park concerts; cut movies in the park; agreed to give the Boys & Girls Club $ 64, 000 for transportation; and allowed funds to hire a fire fighter later in the year. “ Next year, he’ll add one new one, do one replacement and he’ll be down two firefighters he will not replace during the year, ” Becker said in summary of Fire Department personnel changes. In total the Boys & Girls Club will get $ 211, 750 from the city in 2008, compared to $ 250, 000 in 2009. Overall budget “ So, when all’s said and done, our general fund budget ends up being $ 35 million, total budget $ 126, 500, 000. So the total didn’t change, it was shifted between sales tax and capital, and the purchase of the fire truck was deferred, ” said Becker. The 2007 adopted budget was about $ 127 million. While the 2008 budget appears to be about half a million dollars less, that change reflects certain adjustments, such as not including the Advertising and Promotions budget for which the city has no control and not trying to forecast, or estimate, redemptions related to mandatory debt service.
Operations up The city’s budget is up $ 4. 2 million for total operations, those monies used to run the city —not including major capital projects or debt services. “ Strictly the operational part of it is up $ 4. 2 million, ” said Becker. Components of the increase are the 2007 compensation (salary ) plan and forecasting of the costs to operate the new fire station and the wastewater treatment program. “ Because of those three things, the operation portion of it is up $ 4. 2 million. ” Becker stressed that despite that appearance of an increased budget, the city made “ real reductions. ”
“ We still had to take out the Fourth of July celebration. We still cut Gulley Park concerts. We still cut some manpower in police and fire, which, although it’s not going to directly impact core services, it’s still a reduction. It’s still going to have a subtle change on what’s being provided, ” he said.
He also referred to cuts to the library; the swimming pool being open one less day per week and opening later; reduced funding for drainage and drainage studies; a reduced contribution to the Council on Aging; and cutting $ 960, 000 from funding which had been earmarked for trails in 2008.
“ So, to go away with an impression that we didn’t really reduce — we did reduce, ” he declared.
“ We came to a compromise of what everybody felt core services were; we made priorities about no elimination of personnel, ” he said of the council budget decision. “ We cut, pencil and paper, all we can. They (the council ) really looked at it (the budget ) and nobody found any magic.
“ We have a workable capital budget; we have a workable operations budget. Does it solve our future problems ? No, ” the finance director said.
Becker noted, too, that the budget is all contingent on revenue estimates, which assume a 2 percent increase in sales tax revenue over 2007 projections, which would still be less than what was collected in 2006.
Speaking of the budget process in general, Becker said, “ Our number one priority is to keep people employed if we can and to provide the services to the citizens we need to provide. We need to make sure people are secure in their houses and if there’s a fire it’s put out. We have to keep it all in perspective. ”
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