Available general funds running thin

Laura Sturza

The recent rains reflected the gloomy mood at City Hall as officials

considered the mid-year budget forecast, which includes a $5-million

drop in available general fund money and an $8.6-million deficit next

year.

The general fund’s available balance -- cash that has not been

committed to any service or purchase -- went from $5.6 million at the

end of fiscal year 2001-02 to a projected closing balance of $200,000

for fiscal 2002-03, Financial Services Director Derek Hanway said at

Tuesday’s City Council meeting.

It is the first time the balance has been so low since the

mid-1990s, he said.

Those numbers only account for available funds. The total general

fund balance, as of Dec. 31, was $112 million. It pays for services

such as law enforcement, public works, community development,

libraries and parks.

“The more disturbing trend is the recurring revenues vs. the

recurring appropriations,” Hanway said.

Reduced revenues include income from utility-users and

transient-occupancy taxes, and lowered interest rates, which affect

city investments. Higher expenses are mainly the result of employee

compensation and benefits.

Increases in employee packages are expected to account for an

$8.6-million deficit for fiscal 2003-04, a figure the city plans to

balance by cutting up to 10% from department budgets. Details of

those cuts are not being made public, Hanway said.

“These are preliminary numbers, not anywhere near what the

proposed budget will be, which will come out May 1,” Hanway said.

“Obviously, when we propose a budget, we are not going to propose a

budget with a deficit, so there are going to be a lot of changes

between now and then.”

Adding to the uncertainty are projected state cuts, the actual

amount of which will not be known until summer.

The Management Services Department is meeting with all employee

associations “to discuss alternatives and options,” Management

Services Director John Nicoll said. These include reductions in pay,

reductions in force, furloughs, a reduced work week with reduced pay,

and wage freezes or rollbacks, Nicoll said.