City Council members delayed final action on the 2020-2021 budget Tuesday, instead directing city staff to analyze additional cuts to substitute for a 1.7 percent increase in utility rates.
The council made the decision after holding a public hearing on what is calculated to be an $89.4 million operating budget for the fiscal year that begins July 1.
City administrators have been careful to refer to that budget as a “place holder,” one that meets state mandates for setting a budget in place seven days before the fiscal year begins. The budget under consideration meets that requirement, but City Manager Michael Cleghorn and his staff say they also expect that budget to be amended multiple times in the coming year as the revenue picture becomes clearer. City officials and financial experts across the nation predict dramatic decreases in sales tax and other operating revenue as the country deals with business closings and decreased consumer spending in the wake of the COVID-19 pandemic.
Cleghorn said that, among other things, next year’s budget was calculated on a 1.7 percent increase in utility rates, a number that would generate $600,000 more in revenue and one based on the change in the Consumer Price Index (CPI) over the past 12 months, as allowed by a long-standing ordinance. The overall monthly effect on city utility customers would range from 85 cents more for base-level customers (those who use 2,000 gallons of water or less per month) to $1.15 for those who use 5,000 gallons a month (considered to be the average user).
Ward 4 Councilman Jay Burk said he has concerns about using the CPI to raise utility rates when citizens are out of work and businesses are closed, with no recourse in getting back revenues. Burk said he would rather see city administrators take another look at city finances and cut an amount equal to the $600,000 that the 1.7 percent increase is projected to generate.
Cleghorn said his options are limited, adding those savings would have to come from personnel through such actions as additional furlough days (12 already are calculated into next year’s budget) or eliminating more positions. Cleghorn said taking the $525,000 projected as a carryover from this fiscal year into the next still would mean finding $75,000 to $85,000 in personnel cuts.
Burk said council members know some additional and empty positions should be cut to trim the city budget (he did not identify them). Burk also said he isn’t sure he believes the CPI increased 1.7 percent in the last 12 months “because of what is going on in the world today.” Finance officials said the CPI lags behind actual activities; city officials also have said city revenues had increased over the same period last fiscal year before the COVID-19 pandemic hit in mid-March.
While Cleghorn warned that delaying the utility rate increase this year could mean next year’s utility increase would double, Burk said foregoing this year’s increase “is just good business.”
Other council members said they had mixed feelings, with Ward 7 Councilwoman Onreka Johnson asking whether the city could do a combination of things, cutting more expenditures to allow for a smaller increase in utility rates. Cleghorn said the city’s options are few, noting his staff has cut as much out of materials and supplies as possible.
Ward 8 Councilman Randy Warren had another concern.
“It frightens me to have zero carryover,” he said of revenues available to begin the next fiscal year, adding that without a carryover the city “has no wiggle room at all.”
Council members indicated they have some time to consider before the budget has to be put into place June 24 and directed city staff to bring ideas back to the council floor for the June 9 meeting. While that budget discussion was continued until the June 9 meeting, the public hearing was not. Tuesday’s public hearing was closed, after no residents spoke.
Next year’s budget also includes continuation of an existing hiring freeze (only crucial positions are being filled), but employees will receive their merit step increases (given to qualified employees based on length of service). That action will take total city staffing to 841 next fiscal year, when 867 positions are calculated in this year’s budget. The city also expects to save $400,000 by cutting twice-a-week residential trash collection to once a week, beginning Oct. 1. The details of that plan still are being set.
