Taking a Sharper Pencil to the Budget

The main focus of this past week’s city council meeting was the first proposed budget for our new city. An overflow crowd of more than 60 residents packed the meeting room at the Y to hear the first reading of the budget.

Several residents addressed the council and their comments echoed the thoughts of most of the attendees- $2.7 million is simply too much. One resident made the observation that the budget numbers seemed "too rounded" and were a little "fluffy."

With that thought in mind, I have taken the liberty of putting a sharper pencil to the budget in hopes of finding a number that is more palatable to the taxpayers yet leaving the council enough money to get the city up and running. The original budget added up as follows:

REVENUE

Property Taxes          $1,727,168

Franchise Fees                500,000

Other Revenue                500,000 (from Tax Anticipation Note)

Total Revenue           $2,727,168

EXPENSES

City Council              $    83,111

City Mgr Dept               199,954

Gen Operations           1,017,650

Finance Dept                  188,587

Legal Svcs                      200,000

Facilities/ Bldgs              250,000

City Clerk                         91,936

Contingency                   294,046

Community Dev             201,885

Reserves                          200,000

Total Expenses           $2,727,168

Many of the objections I’ve heard center around some of the salaries, benefits and the call center. There wasn’t too much fluff in the budget for the council salaries, so I left it unchanged. For the city manager, his salary has been reduced 11% to $120,000 per year. I carried that same reduction through all the salary based line items in his budget (insurance, Social Security, Medicare, etc.) based on the pro-rated $90,000 salary.  The 401K contribution was reduced to $12,000 which is still above average. I’ve also reduced the M&L expense to $15,000. If we’re going to pay a guy $120K/ yr to run a part-time city, he ought to be able figure out how to get here and settled for $15K or less.

Under General Operations, I have reduced the ‘call center’ expense to $24,000 per year prorated to $18,000 (since all the other ‘salaries’ are prorated for 9 months). That should be sufficient to contract with a temp service for a receptionist type person to answer the phones five days a week during normal business hours. If demand shows a greater need the idea can be revisited for next year’s budget.  

For finance, some of the numbers seem a bit high but it remains to be seen how much work will need to be done and $85,000 per year doesn’t seem unreasonable for a CPA.

$200,000 for legal services seems reasonable in light of the fact that the city has already had one business owner claim that the permit moratorium could cost her $180,000.  Legally things could get ugly in a hurry for the city, so we need to be prepared.

Facilities and Buildings budget has been reduced by $50,000. The council should be able to save a lot of money by buying or leasing ‘gently used’ office furniture, and it just strains credibility to think it will cost $50,000 to get some signs erected, trash emptied and floors mopped.

I made no changes to the city clerk budget. The clerk will probably be the only fulltime employee, and will also work odd hours attending council meetings, etc. $65,000 per year seems reasonable.

The contingency fund was very questionable. The $100,000 line item for city manager contingency may be reasonable. The start up contingency of $194,046 is not. If the city manager already has $100K, and there are reserves of $200K, then what the heck is another nearly $200K for? To paraphrase the consultant at the meeting last week, it makes the revenue and expense numbers match. Looks like a great place for a big savings to me.

     So the revised expenses tally up as follows:

City Council          $  83,111

City Mgr                  157,982

General Ops             935,650

Finance                    188,587

Legal Svcs               200,000

Facilites/ Bldg         200,000

City Clerk                  91,936

Contingency            100,000

Community Dev      178,715

Reserves                   200,000

Total Expenses      $2,335,981

$2.3 million still sounds high. But keep in mind that there is a $500,000 line item in the General Ops budget to repay the tax anticipation note. This is money the city will be borrowing to get up and going before tax revenues start flowing to the city. This money will be used to pay many of the expenses already itemized elsewhere in the budget. So if it is subtracted out we are left with actual expenses of $1,835,981. That number sounds a lot more reasonable than $2.7 million. Yes, its still more than twice what the CVI study recommended, but I guess we are eventually going to have to accept that the feasibility study was just that- a feasibility study, not an actual budget.

So the $64,000 question is, is $1.8 million a number you can live with?