Kent city officials do not expect to cut any city jobs this year in order to meet a 2010 general fund budget of $80.3 million as well as a reserve balance of $6.3 million, or 8.1 percent of the general fund.
City Councilman Les Thomas asked City Finance Director Bob Nachlinger at the Council’s Operations Committee meeting Tuesday whether Nachlinger anticipated any layoffs this year to reach the 8.1 percent reserve-fund mark set by the Council in December when it adopted the 2010 budget.
“No, I do not,” Nachlinger said.
The city cut 28 employees last fall and eliminated 25 vacant positions from the 2010 budget.
Nachlinger told the committee during his monthly financial report that salaries were up $900,000 in November compared to previous months because of cash payouts associated with labor contracts and severance and leave payouts due to the laid-off employees.
Nachlinger said the city will make up that $900,000 difference by leaving positions vacant in 2010 to save about $75,000 per month.
John Hodgson, city chief administrative officer, said in an interview after the committee meeting that the city will keep about 10 to 15 positions vacant to help balance the general-fund budget.
“We don’t want to lay off anymore and I think we can do it,” Hodgson said to the committee.
Council members and city staff emphasized in December that if revenues come in lower than projected for the final two months of 2009, city officials might need to make further cuts.
City staff will receive the monthly financial numbers for December by the end of February, but do not anticipate any shortfall that would lead to layoffs.
Nachlinger also expects to hit the 8.1 percent reserve-fund mark.
“It looks like we will be in good shape at 8.1 percent or higher for 2010,” Nachlinger said.
The November monthly financial report showed sales tax revenues were up $436,000 (38 percent) over budget at $1.56 million compared to the projected amount of $1.13 million.
The Council has $1 million that it set aside last month as part of the 2010 budget for flood relief in case the Green River floods the city this winter. So far, the river has not flooded.
Thomas asked city staff Tuesday about the use of that $1 million, if the city does not need to spend the money on flood cleanup, to make up for any revenue shortfall.
Hodgson responded that he did not expect to need that $1 million to make budget and that the money should be used to increase the reserve balance up to about 10 percent or be set aside as a rainy day fund.
Nachlinger told the committee the city also continues to pursue an estimated $600,000 from the state as part of the city’s streamlined sales-tax mitigation payment. City officials claim the state underpaid the city $600,000.
Since July 2008, the state has been crediting sales tax to locations where products are delivered, rather than where products were made. The state agreed to pay mitigation to cities adversely impacted by this change, including Kent, which is home to numerous manufacturing businesses. Kent received $4.3 million from the state for revenue losses from July 2008 through June 2009.
But city staff claims there were errors by the state in calculating taxes from five companies in Kent for a total of $600,000. That $600,000 is included in the city’s 2009 budget.
“If we don’t get the revenue, it will impact the fund balance,” Nachlinger said. “But I anticipate getting it. I just don’t know when.”
City staff continues to meet with officials from the state Department of Revenue and the state Office of Financial Management to ensure the city receives the money, Nachlinger said.
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