By Staff
Drop in revenues, rise in expenses creates dilemma
By MIKE VOSS
Contributing Editor
With uncertainty growing over a sinking economy, Washington officials face several challenges in cobbling a budget for the 2009-2010 fiscal year.
City department heads and division supervisors are developing strategies to address a 7.5 percent anticipated shortfall between projected revenues and budgeted expenditures.
The city expects to lose $335,000 in sales-tax revenue, $110,000 in permit-related revenues, reduce $100,000 in revenue transfer from the electric fund to the general fund and reduce $270,000 in miscellaneous one-time revenues, according to a statement City Manager James C. Smith sent by e-mail to city employees, City Council members and media outlets.
The city also faces at least two unavoidable cost increases — $130,000 in the city’s health insurance program and $172,000 in the city’s debt-service payments.
Those revenue losses and fixed-cost increases come to a combined $1,117,000, which has gotten the attention of City Council members.
The recession is to blame for the drop in sales-tax revenues, one city official said.
Washington’s not the only city losing sales-tax revenue, either, she said.
Mercer said Councilman Archie Jennings was right last week when he said there are no “sacred cows” this budget season. In fact, the city may have to ask its employees to make some sacrifices that would save the city money, Mercer said.
The city could save money by not contributing at all or contributing minimally to employees’ 401K plans over the next year to two years, Mercer said. That would save the city at least $100,000 a year, he added.
The city contributes $50 per pay period to employees who contribute at least $5 to their 401K plans during that pay period.
The increase in Beaufort County’s jobless rate also concerns Smith.
Finalizing a balanced budget means the city “must put every option on the table,” Smith wrote.
Those options include reducing city-employee wages by reducing work hours and reducing or eliminating some city services — moves the city wants to avoid, Smith said.
Assuming the city can’t close the gap, it will consider closing a city-operated facility or reducing or eliminating a service, Smith said.
Most of the city’s discretionary services, such as the waterfront docks are self-funded from fees, he noted.
Another option is dipping into the city’s reserves, which is not preferred because they are one-time sources of money, which when consumed are not available the following fiscal year, Smith explained.
Expected upgrading of major equipment and replacing other equipment and vehicles may not happen in the coming fiscal year, Mercer said.