After announcing the city is “flush with money” and asking board members to consider his proposal on spending $1.4 million in excess cash, Finance Committee chairman Ken Smith is warning the proposed budget for fiscal year 2014-15 might require a tax increase.
Smith says the statement was made before he received the proposed budget that was generated by Finance Department director Shirley Durham.
“I just want us to realize, that Shirley is projecting a cash balance of $5.8 million and hopefully, she is right,” said Smith. “With our revenue, the projected fund balance is $3.1 million. Last year, the Finance Committee and the board didn’t want a projected cash balance below $4.5 million. Last year, at $5.8 million, was the largest you could ever remember. At 20 percent of our budget, with our budget being $16 million, 20 percent of that would be $3.2 million. We are going from a fund balance of $5.8 down to $3.1 million. If we go with the idea that we need a $3.5 million fund balance, you are looking at a tax increase here.”
The announcement was made after the first round of budget discussions ended with minimal cuts to the proposed budgets under review by the Streets and Sanitation Committee, Building and Grounds Committee, Safety Committee, and Water and Sewer Committee.
Smith brought a recommendation to the city in early June on how to spend $1.4 million in excess money, stating the city’s unrestricted cash was projected to be $5 million at the end of June and the city only needed $3.6 million.
“We shouldn’t have anything more than 20 percent of our yearly budget,” said Smith. “I’m projecting our yearly budget next year will be $18 million and our unrestricted cash should be $3.6 million. We will have $1.4 million in excess cash.”
He recommended spending the excess funds on a 15-cent tax decrease, as well as purchasing a new fire engine, a down payment for construction of a new police building, renovating the ball parks at the Civic Center and the soccer complex, prepay two years of the City Hall capital outlay notes, and spend some of the funds on various other city projects.
After seeing the proposed budget, Smith now warns against spending.
“The final decision will be up to the board,” he said. “The board may decide that $3 million is enough, but I would caution us against running our fund balance down too much. Sixty-five percent of our expense is in personnel, which only leaves 35 cents out of every dollar to run the city.”
Mayor Jimmy Haley added, “You can’t offer services without employees.”
The meeting ended without further discussion.
Officials are currently reviewing the proposed department budgets in committees. Once approved, the budgets will be reviewed by the Finance Committee for a tax rate recommendation. The budgets and Finance recommendation will be sent to the board for final approval.