Assessing city fiscal status difficult
Assessing the city’s financial status is like eating Jello with a fork - about the time you think you have it, it moves again.
The administration is concerned about dropping revenues and it plans to propose spending cuts of about 10 percent at Tuesday night’s City Council meeting.
Some think the situation is not as dire as Mayor Bob Morris and City Clerk Earlene LeJeune think it is, and point to what seems like a comfortable operating margin through the end of March.
In an attempt to corner the Jello, here are some budget considerations:
Revenue for nine months was $379,000 below budget and $328,000 under the same nine months last fiscal year.
But the $379,000 includes $225,000 that was not transferred from the Sales Tax Revenue Fund to the General Fund.
The General Fund, because expenses were down, apparently didn’t need the transfer.
Without the transfer, the fund is under budget by almost a quarter-million dollars. With the transfer, the General Fund would be only $154,000 short.
And if $162,000 not transferred from the Utility Fund had been moved, then the General Fund revenue would actually be $8,000 over budget for the nine months.
The fact is that a number of General Fund revenue accounts are over budget, and by considerable amounts. Examples include corporate and property taxes, $121,000 over; street maintenance taxes, $89,000 over; utility franchise tax, $59,000 over; cable TV franchise tax, $27,000 over.
So, is there really a shortfall? Depends on how you look at it.
Dropping sales tax revenue is a concern. For the nine months it’s about $8,000 under budget about $100,000 behind of last year.
Collections of January, February and March that were below budget and below last year, and the forecast is that consumer spending may not improve for several months.
Another revenue concern is natural gas sales, under budget about $50,000. That’s because of a relatively warm winter and lower consumption by city residents. However, the gas was used cost the city more than a year earlier - $127,000 more to be exact.
That’s a $177,000 swing that, while uncontrollable is still an ingredient in the budget mix.
On the face of the account numbers, the city’s operation income through March 31 was $1.12 million. In other words, the bottom line figures show that much more was received than spent. That seems to be a result of closer spending controls.
But that’s not necessarily the entire tale of the tape.
For instance, there is $403,000 earmarked for capital road construction. It’s money accumulated this year but set for spending next year. There was never any plan to use it this fiscal year.
Taking it from the revenue-spending totals would leave the operating income at about $800,000.
There’s another $624,000 in other unspent capital outlay appropriations. Backing that out of the $800,000 would leave operating income at about $176,000.
That number, as opposed to the $1.12 million, puts the administration’s concerns in a different perspective.
What Eunice’s financial fortunes truly are may have to be answered by its auditor during the budget process.
Meanwhile, the administration will take its numbers to the council on Tuesday night.
Fuel costs are going up for cities just as they are for individuals. At a conservative estimate of $1.25 more per gallon average than the current fiscal year, costs without any mileage increase would jump about $105,000 for the city, according to LeJeune.
Minimum wage goes up 70 cents hourly in July. To raise all city employees to the new rate and to keep the existing proportional differences in pay scales would cost about $250,000, according to the mayor.
About half the budget is untouchable in the sense it consists of wages, salaries, insurance, utilities and other fixed costs no one wants to tamper with or can’t.
From the remaining half -- $7 million -- the administration hopes to propose $700,000 to $800,000 in cuts to meet expected revenue declines and increased costs in other areas.
On paper, $500,000 could come from sales tax revenue not budgeted for spending.
That’s the amount ordinarily allocated to the road overlay program. But the program is every-other-year, so funds collected this year will be spent in the next budget year, with no new allocation required. The city will bank the half-million for unforeseen capital needs or for use in the next construction year.
Unspent or not-yet-appropriated sales tax revenue is part of what has led to $3.4 million cash and investments on hand in the city’s four sales tax bank accounts.
If the administration chooses that course, $200,000 to $300,000 remains under the knife.
If not, a wide swath will have to be made.
Morris has said he’s looking for $200,000 in Police Department cuts. Chief Gary Fontenot says that once fixed costs are backed out, there’s about $200,000 left.
That’s the rub. Government by its nature is top heavy with fixed costs.