Budget Proposal Threatens To Empty City’s Savings Account

By Linda Kor
   “It’s really pretty bleak,” commented Holbrook Mayor Jeff Hill following a work session review of the 2009-10 year fiscal budget.
   The mayor, city council and city administration have been charged with the task of not only providing a balanced budget but also findings ways to not drain the city’s savings in LGIP (Local Government Investment Pool) so as to keep some funds in reserve for upcoming years.
   The concern is a very real one. The funds in the city’s LGIP fund total approximately $1 million and will not be replenished if used. The budget as presented would entail using nearly all of the LGIP funds in order to pay for completed and planned projects.
   A proposed city-wide street repair project would take $500,000, while $272,500 would pay for levee recertification, $66,340 for the renovated pool that was just completed, $23,000 to Al Holler for his work on the sales tax audit, $99,000 for grant matches and the remaining balance of nearly $40,000 to cover the budget for parks and recreation.
   Using up the entire savings available to the city was not an option the council was willing to consider.
   “What’s the bare minimum we can have in LGIP? Staff needs to let us know. They know their jobs better than us but we may need that million and we cannot spend all we have,” stated Hill.
   The big-ticket item on the budget of $500,000 allocated to street improvements met with the biggest objection.
   “We can’t spend $500,000 on roads. We need to be able to keep $1 million in our LGIP fund to keep for next year,” stated Councilman Kent Darris, referring to the certainty of more difficult economic times in the future given the current state of the economy.
   A review of the ongoing expenses included $107,000 in debt service for equipment that was purchased and will be paid for in seven years and $40,000 each year to the fair board over the next five years.
   “We have to reserve funds in LGIP to pay our recurring debt until things turn around in the next few years. Right now we have no mechanism to ensure those payments,” stated Councilman Wade Carlisle.
   City Finance Director Randy Sullivan clarified that $472,000 in expenses in this year’s budget will not be in next year’s.
   “The pool, the levee and the sales tax audit will not be expenses that we will have next year,” Sullivan told the council.
   Several city employees were present at the work session wondering if their jobs would be a casualty of the budget.
   “My concern is simply jobs,” stated Councilman Phil Cobb. “Streets don’t destroy people but losing jobs might. I’ve driven these streets for 20 years and I can live with them. I view their flaws as natural speed bumps.”
   As a gesture of commitment to retaining jobs, Cobb produced his $100 check that he receives as a councilman and presented it back to City Manager Carlo Pilgrim.
   “I know it’s not much, but if we’re saying every bit counts then this is where I start,” Cobb remarked.
   “Is there anybody here that thinks we ran (for council) to cut jobs?” stated Hill. “I pay taxes for services rendered. I don’t (pay taxes) so that we can all have jobs. We are mandated by law to perform certain services. As such I will not cut back on police, and I don’t want to cut back on dispatch, but I’m willing to. I’m also not willing to cut back on our fire department. We have to provide water, wastewater and sanitation to exist. I don’t want to see a single person cut back but we’re responsible for everyone and I can’t spend $1 million just to maintain the status quo. The wonderful thing about providing services is that it also provides jobs.”
   The concept of cutting jobs from the city may have to be considered if no other options are be presented.
   “The cuts we’re proposing will affect many employees but none of these positions will be completely eliminated, just brought down to part time,” explained Sullivan. “This doesn’t help with feelings, I know. Economic times are not good and we’d still end up having to pay unemployment insurance if we lose employees.”
   The consensus of the council was to forgo the $500,000 set aside for street improvements but even with that decision, more cuts will be needed.
   The council reviewed measures from possible revenue increases to cutting back on expenses and using other funds to prop up the current budget.
   “We are having to rob from water/wastewater and HURF (Highway User Revenue Funds) too. In a perfect world we would not allow this to happen and I am against it. Right now every valve is breaking on pipes because some of our infrastructure is so old,” stated Hill.
   “Have we looked at ways to raise revenues?” asked Vice Mayor Cynthia Stuart. “We have been subsidizing Sun Valley utilities, why not get rid of that. We need to be proactive.”
   “We have tried to find interested parties for the Sun Valley properties and had two interested parties, but we have not heard back from either one. I’m assuming it’s due to the difficult economic times,” Pilgrim explained. “This is a sales tax driven state. Everything is brought in on sales tax. I wish there were alternatives but there are none. We may consider an increase in utilities but those increases would go into the utilities/wastewater fund and would not affect the general fund.”
   A sales tax audit is still being performed with $180,000 located in back taxes or taxes due so far, which will offset some of the expenses.
   Carlisle stated that an immediate necessity is to list the budget expenses and revenues in a way that clarifies what will be spent in what area. For the upcoming fiscal year staff consolidated item expenses for simplification, but this was viewed by Carlisle as even more confusing.
   “I want to know details. This simplification makes no sense to me. I have no way to compare what’s being spent on what. It’s all lumped together,” he said.
   Pilgrim agreed to break down line items in the budget for clarification for the council by the next council meeting on Tuesday in order for the council to have a clearer picture of expenses per item.
   The council agreed that a minimum of $700,000 would have to be left in the LGIP fund in order to have some financial security for next year and possibly, several years to come.
   With the decision to remove street improvements from the budget that meant another $300,000 would have to be accounted for.
   “I’m hoping that once the books are closed for May then the total LGIP funds will come to about $1.2 million. If that’s the case, then we won’t have to take those additional cuts, but regardless of that the $500,000 will be necessary to pay for those other services mentioned,” stated Sullivan.
   “Bring back a budget that leaves $700,000 in LGIP,” stated Hill. “If this is going to involve cutting jobs, we need to know this right away so we can let people know what’s going on.”
   The council was scheduled to meet at 7 p.m. on Tuesday, June 23, to review the budget with the final figures in place and possible options in case additional cuts are needed.