Minutes 05/22/1980 - Laserfiche WebLink

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375-C THURSDAY MAY 22, 1980 I think we are facing the following problems, and the problems will confront us for the next several years: 1. Our revenue growth has kept pace with expense growth but the revenue growth is uncertain while expense growth is not. Examples: A. This year's budget includes $380,000 of new state revenues from the Annexation Bill. Where will $380,000 of new revenues come from next year? B. Last year we budgeted $157,600 income from Wine and ABC profits and actually received $182,000. This was due to a one-time windfall caused by a new state disbursement procedure. This year, Wine and ABC profits are budgeted at $93,700, a drop of $63,900 from the amount budgeted last year, C. Last year we balanced the Budget by showing an $80,000 increase in Business License Taxes. The State Legislature has frozen the growth in this category, This year's budget reflects only a $36,000 increase in Business License Taxes (only $5,000 more than the revised estimate). Last year this category grew 19% -- this year, 7%. Next year this category will not grow at all. D. Last year's Budget reflected a $29,000, 6% increase in utility taxes. This year, due to conservation measures and resulting drop in electricity growth, Utility taxes are projected to grow $4,000, 1%. 2. Inflation has certainly had an impact on the budget, but several expenses have soared beyond normal inflation and have had a dramatic effect on total expenses. Examples: A, Last year the City's employee contribution for the Virginia Supplemental Retirement System was 3.75% of payroll, an increase from the previous year of 10%, This year the City's rate was set by the State at 5.79% of pay- roll, an increase of 54%. This will cost us $70,000. B, The increase in oil and petroleum related products has had a tremendous effect on expenses. Examples -~ Sale of Energy to City Departments up $65,000, 31%; materials for street and sidewalk construction up $22,415, 20%. The increases in certain expense categories are far greater than the rate of inflation. 3. While it is true that revenues have kept pace with expenses percentage-wise, it is also true that the dollar gap between General Fund Expenses and Revenues widens every year. To illustrate: Shortfall General Fund Expenses Vs. General Fund Revenues 80-81 Budget 79-80 Budget 78-79 Budget 77-78 Budget 1,270,435.00 1,095,209.00 1,044,999.00 1,261,685.00 4. The City has dealt with this shortfall each year by (1) the transfer of Electric Profits to the Gene!al Fund and (2) by generating surplus and using part of it. 5, As I see it, the yearly build-up in surplus that we have experienced the last ~ew years may not be as dependable in the coming years. A few reasons: A. The schools are budgeting tighter to actual due to new budgeting procedures instituted by the School Board.