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
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.