Budget tweak changes city fiscal outlook

‘Less conservative’ approach used to increase budget surplus
City councilmembers got their first look at next year’s budget Monday night and the picture was rosy compared to where it’s been the past few years.
With a projected surplus for this fiscal year and the next, the mood at City Hall was much less tense compared to previous budget cycles that included employee layoffs and cuts to services.
The change, however, is largely due to a shift in accounting that sets aside less money each year to cover city employee time off. For this year’s budget, that shift will result in a million dollar surplus for the 2012-2013 budget.
In effect, the city was setting aside funds in benefit accounts to each department that would fully cover the costs of employee leave time at 100 percent. When not every employee used up all of their vacation, sick, unemployment, or workers compensation each year, the city would end its budget year with additional unused funds.
Instead of funding these accounts at the same levels, city Administrative Services Director Jone Hayes recommended using a three year average of the money actually paid out.
The less conservative budgeting approach, as well as other accounting changes made during City Manager Marjie Pettus’ tenure, is an attempt to provide a more accurate budget picture so that projections made at the beginning of the fiscal year are closer to the actuals at year’s end.
“We’ve been re-visiting a lot of policies and trying to look at those practices that don’t make sense,” Pettus said.
Hayes explained the new accounting shift. “We don’t expect everyone to leave at once, so we don’t fund to pay everyone off at once. And some of the leave isn’t cashable. It’s not actually a benefit that will ever be paid unless that happens to them,” like workers compensation, she said. “Departments were being charged for additional expenditures that weren’t actually occurring this year.”
Along with the benefits accounting change, Hayes said that positions that were left unfilled longer than anticipated, resulted in a $1.1 million change in salary and benefits for this (2012-2013) fiscal year.
Last summer, the city projected a budget deficit of more than $800,000. At a mid-year budget review in February, the budget was amended and the city projected a deficit of just over $450,000 based on higher than projected sales tax revenues and lower than anticipated expenditures.
Monday, the city estimates it will close out the year with a surplus of over $1 million.
City councilmember Tom Chambers cautioned that the budget change didn’t happen because the city suddenly found additional funds.
“It’s not like all of the sudden there is a half million dollars that we don’t know where it came from,” he said. “We’ve just taken a less conservative approach to how we fund this.”
Because of the change, the police department will add a sworn police officer back into its budget, bringing the number of officers from 15 to 16.
During last year’s budget meetings, Chief Kevin Burke met the city’s expectations of cutting expenditures by not filling an officer’s position, and he said for the past year, the department has been unable to meet the community’s needs due to the decrease in staff.
“The council asked me if I felt we could run effectively with 15 officers. At that time, my best judgement was that we could,” he told the council Monday night. “But I was wrong a year ago when I made that statement. We do need 16 officers. You have very high expectations — the community and the council — of the services we provide here. With 15 officers, I’m finding we are coming up with a difference of what the community expects the police to provide, particularly with response times.”
Burke said response times for non-emergency calls has increased significantly, and it has become frustrating for the community and the police officers who can’t provide the service expected.
The additional officer was included in the 2013-2014 budget projections.
Other requests from departments that will include staffing increases, vehicle replacement funding and deferred maintenance will be presented to the council on supplemental requests later this month.
2013-2014 budget workshops will continue on May 13 with outlines of the Electric, Public Works and Community Services funds. A Measure V (sales tax increase) workshop will be held on May 15, when supplemental requests will be made to the council for additional funding for departments. The city has set aside June 3 and 17 for continued budget discussions. There also may be an additional meeting planned for discussion of the Capital Improvement Program.