Minutes 05/22/1980 - Laserfiche WebLink

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375-D THURSDAY , MAY 22, 1980 B. Welfare expenses have been much less than budgeted for the past six years but each year get closer to budget and generate less and less surplus, C. In order to balance the budget, Council has been cutting little real expenses, mostly estimates, and making more upward revenue adjustments. 6. If and when a budget year comes when projected Electric Department profits drop (as happens in a year we expect a rate increase from APCO) coupled with a low General Fund year-end surplus, the City will face a budget crisis, because not enough money will be available to balance the short- f~ll between General Fund Revenues and Expense~. Example: Suppose that next year we have a $138,000 surplus, an Electric Department projected profit of $500,000 and a General Fund shortfall of $1,300,000. We will be short by $662,000, 22% of current General property taxes. 7. In order for Council to be in a position to plan property and to minimize the risk of a potential budget crisis, Council should work toward the long-range policy of reducing the dollar shortfall between General Fund Revenues and Expenses. 8. To do this, there are four long-range alternatives: A. Increase the Tax Base by either imposing new taxes such as telephone, natural gas, tobacco: etc. or raising existing rates, B. Decrease Expenses which occur year after year such as reducing personnel, reducing services, or reducing fixed costs. (Examples would be contracting services and/or closing a school by the School Board) C. Increase our Production of Electricity so that the profits of the Electric Department used to balance the General Fund Budget will grow dependably with inflation instead of fluctuating each year as is the case now. D. Continue to Generate Year-End Surplus by underestimating revenues, over- estimating expenses and not spending on many budgeted expenses. Obviously, this alternative cannot be planned for or depended on year-after-year. Conclusion: We may get through this year without a tax increase, but if we want to be in a solid position where we can continue to do this year-after-year, I feel we need to continually pursue policies to reduce the yearly shortfall between General Fund Revenues and Expenses by cutting recurring expenses wherever possible and finding dependable revenues to fund this shortfall. Water and Sewer Funds: Traditionally, the Water and Sewer Funds are budgeted to show a break-even situation and planned additions to surplus are shown as expenses in the Sewerage System Improvements Account and the Water Improvement Program Account. For example, last year the Budget projected the Sewer Fund to lose $1,500 and the Water Fund to make $1,500, a break-even situation; however, $84,414 was budgeted in the Sewerage System Improvement Account and $34,502 in the Water Improvement Account representing a potential $118,916 addition to surplus at the end of the year. Mr, Yeaman's current estimate is that both funds will show an addition to surplus of $124,500, a decrease of $65,600 from the previous year.