Despite declining revenue drops in sales and utility taxes, Kent city officials project a balanced budget by the end of this year because of reduced expenses.
The city should end 2009 with a positive general fund balance of $5.64 million, Finance Director Bob Nachlinger told the City Council’s Operations Committee Tuesday during his monthly budget report.
The city has reduced expenditures by $6 million this year to try and balance the shortfall in revenue from sales taxes, utility taxes and other fees that have come in at lowered levels.
Even with the cost-saving measures, the projected positive general fund of $5.64 million remains about $2.75 million under the original 2009 budget ending fund balance of $8.39 million projected last December by city officials.
“The good news is we collected $10 million in property taxes (in October) so the general fund is now positive and not negative,” Nachlinger said to the committee.
While the property-tax revenue helped, the city received sales tax revenue of $908,000 in October, about $118,000 or 11.6 percent under budget. The city’s October sales-tax revenues were actually collected by the state in August and paid to the city two months later.
Sales-tax revenue was 1.7 percent under budget in September after it ranged from 18 to 33 percent under budget in each of the first eight months of the year.
“For the general fund estimate for the year, we did recast the numbers,” Nachlinger said. “It looks like sales-tax revenue will be $900,000 under budget (for the year).”
Nachlinger estimates $17.1 million in sales-tax revenue for the year, compared to an earlier estimate of nearly $18 million. Utility taxes also are expected to be about $900,000 under budget, at about $15.1 million, compared to an earlier estimate of $16 million.
To combat the lower revenues, the city reduced expenditures by $6 million. That reduction includes a savings of $4 million from pay cuts taken by all four Kent city unions as well a group of non-represented employees, frozen vacant positions, the delayed replacement of fleet vehicles and cuts in operating expenses in several departments.
The city saved another $1.2 million when Mayor Suzette Cooke suspended health-care premiums for the city and employees for November and December.
“The health-care fund is doing very good so the employees do not have to pay anything for two months and the city doesn’t either,” Nachlinger said in an interview after the Operations Committee meeting. “People have been healthy. The fund is driven by claims. If employees don’t need to go to the doctor, the city doesn’t need to pay any money.”
The city pays about 93 percent of the health-care premium; the employee pays 7 percent.
The struggle among city officials to balance revenue with expenditures is expected to continue into next year.
That is the reason city officials cut 24 jobs last month and are leaving 32 other jobs vacant in anticipation of a $4.6 million revenue shortfall in 2010.
Cooke proposed in October to the Council a $157.8 million operating budget for 2010, including a general fund budget of $80.3 million and $11.4 million for capital projects. The rest of the budget is dedicated to other funds such as water, sewer and drainage utilities.
The Council conducted a 2010 budget workshop Wednesday and expects to consider adoption of the budget Dec. 8. That final budget would include any changes Council members make to the preliminary budget proposed by Cooke.
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