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January 2009 |
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Economic pinch being felt with city budget |
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Thursday, 31 July 2008 |
By BRIAN HAWKINS
Starkville Daily News
Starkville city officials have begun preparing the municipal government’s budget for the new fiscal year beginning Oct. 1, but preliminary projections show the city is feeling the pinch of the lackluster national economy.
In a Budget Committee meeting Monday morning, Ward 5 Alderman Matt Cox, who serves as budget chairman, and City Accountant Debbie Clark presented a preliminary budget to the department heads, Mayor Dan Camp and the other members of the Board of Aldermen. That budget initially projects a shortfall of $292,503 for the upcoming fiscal year.
The shortfall is resulting from a number of factors, said Cox and other city officials.
All operational budgets for city departments were kept flat, but increases in worker’s compensation and state retirement fees drove the preliminary expense projections for the city’s general fund up by .7 percent over the current fiscal year, Cox said.
The city’s general fund budget totals $14,736,244 for the current fiscal year, which ends Sept. 30. Initial projections for the 2008-2009 fiscal year show a general fund totaling $15,028,747, according to initial budget figures provided to the Daily News.
However, revenue projections for the upcoming year are currently at $14.75 million, with the biggest hit coming in a 2.2 percent reduction in ad valorem (property) tax projections.
The value of an individual mill — or unit — of ad valorem tax dollars decreased to about $170,000, while operational expenses for city government — including fuel, materials and supplies — have increased due to the economy, Cox said.
“On the revenue side, Starkville is seeing some effects from the national economic slowdown,” Cox said.
Officials speculated Monday that the drop in the value of the ad valorem tax millage is attributable to noncollectable bank loans reducing taxable assets, Cox said.
The specific cause of the millage value drop is something officials will be working to determine in consultation with the county Tax Assessor-Collector’s Office, said Chief Administrative Officer Lynn Spruill.
“We don’t know specifically what caused the devaluation in the millage, but we’re working to determine that as we continue the budget process,” Spruill said.
The Board of Aldermen will be working with the department heads to trim budget expenses and continue to monitor revenue levels leading up to the formal adoption of the budget in mid-September, said Ward 4 Alderman Richard Corey.
“It’s not doom and gloom yet, but this preliminary budget is a red light. We have to be conscientious about where expenses occur,” Corey said.
While the costs of operating the city are up and the ad valorem tax millage value is down, sales tax collections which finance about a third of the total general fund, are solid, Cox said.
“The one bright spot has been that retail and restaurant sales have remained strong. Fiscal Year 2008 sales tax collections will be up 4 percent over the prior year,” Cox said.
The preliminary budget Cox presented at Monday’s meeting does not include some $531,230 in “wish list” requests for the various city departments, nor does it include any projected pay increases for city employees. A 1 percent cost of living increase for general fund employees was discussed during Monday’s meeting and would require an additional $71,700 over what is currently budgeted.
Increasing revenue for the budget was discussed during Monday’s meeting to help meet growing infrastructure needs, both Cox and Corey said. An increase in ad valorem taxes was discussed Monday, they said.
“I expect the board will consider a revenue increase to fund a more complete infrastructure program. While my budget has $500,000 included for street maintenance and another $526,000 for debt service for prior work, the city engineer, Edward Kemp, now estimates we need $1 million annually just to keep up with our existing infrastructure,” Cox said.
Currently, the city collects 16.15 mills of ad valorem tax annually. State law allows the Board of Aldermen to increase ad valorem taxes by 2 mills annually without a public referendum if a municipality’s millage rate is at 20 mills, Corey said.
In Starkville’s case, the law would allow an increase of 3.85 mills without a referendum since the city is not yet at the 20-mill threshold, Corey said.
Based upon current millage value projections, a 3.85-mill increase in ad valorem taxes would yield an additional $654,500 in revenue, which would help meet the infrastructure needs and help offset the current projected budget shortfall, Corey said.
Cox said there “may be some upside potential in collections over the next few months,” but the aldermen are already having the department heads examine further cost-cutting to help balance the budget and avoid a deficit spending situation.
Infrastructure needs are a priority, however, Cox said.
“As you know, this is our last opportunity to get this right since this is the last budget of our elected term, and I will be pushing hard to make infrastructure our budget priority,” Cox said.
The Budget Committee will continue to meet over the next few weeks, with the first public budget hearing likely being held at the second Board of Aldermen meeting in August. By law, the aldermen must adopt a budget by Sept. 30.
In a related matter, Corey expressed concern that no members of the media or the public were present at Monday’s meeting, possibly due to a non-notification by city staff.
Spruill said Wednesday an e-mail message notifying area media representatives about the meeting was believed to have been sent late last week, and was working Wednesday to verify that messages were sent.
No e-mail messages were received by Daily News staff about Monday’s meeting.
“The ball was dropped somewhere in notifying both the media and the public, and I apologize to the public for the meeting not being made public,” Corey said. Spruill said any non-notification about the meeting was not intentional. “It was just an oversight,” she said.
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Last Updated ( Friday, 01 August 2008 )
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