A possible $1 million deficit in Bowling Green's 2010 budget has city administrators working hard to reduce costs for the remainder of this year and throughout next year, as well as hoping local residents approve a temporary .08-percent income tax levy in November.
With input from the city's top officials, Municipal Administrator John Fawcett outlined a three-tier approach to deal with the deficit in an eight-page letter to city council members on Monday. The letter included changes or cuts suggested to save more than $727,000 if the levy does not pass in November, included in tier three.
Tier one: Continuation of 2009 reductions and efficiencies in organization
Income tax projections are showing the city could face a 5- to 7-percent drop in revenue next year which is being taken into consideration. The 2009 budget was already $1.75 million less than in 2008, and an additional $228,900 in reductions were made in April.
An across-the-board wage freeze was mandated and major cuts in travel, training and part-time workers were made. Tier one strategies recommend these reductions be continued.
This includes a second year for the wage freeze; a (near) hiring freeze; a reduction of travel and training, with the only permitted paid training being to maintain certifications and licenses; a reduction of part-time and seasonal employees; and two line-item changes in the budget.
Two additional recommendations are being considered, a reduction in force through attrition, not layoffs, and changes in city benefits, particularly modifying the health plan with a new provider.
Tier two: Shortfall of $400,000 in the General Fund
In spite of the many changes made to reduce the 2010 General Fund, a $400,000 deficit is still anticipated. Two major changes will address the issue.
First, the city would transfer responsibility for the community center portion of the bond payment from the General Fund to the Community Center Capital Improvement Fund, a payment of almost $275,000.
When the community center was completed, about $1 million remained in the construction fund, intended to be used for capital improvements there or an expansion. The city's bond counsel has confirmed the money can be used for principal and interest payments on the building debt.
Secondly, the city would transfer responsibility for the Central Business District portion of the bond payment from the General Fund to the Capital Improvement Fund, a payment of almost $150,000.
When the Heritage 2000 project was done, the city contributed by borrowing money for road, sidewalk and other enhancements. It must make annual payments on this debt until 2018. The administration recommends the payment be permanently transferred to the Capital Improvement Fund until the debt is paid off since funds will be freed up with the final payment of the Pearl Street fire station in 2010.
Tier three: Strategies if the .08-percent income tax levy does not pass or if revenues continue to decline
A chief concern is the expected negative balance in 2010 of the city's Fire Levy Fund. Many changes were made to help it, including moving some fire-related expenses to the General Fund.
If the temporary .08-percent increase in the city income tax is approved by voters in November, it will generate about $600,000 a year for three years. The additional amount will be used to cover expenses transferred from the Fire Levy Fund into the General Fund, but does not resolve the issue of long-term fire levy funding.
If the income tax fails, the city will have a shortfall of at least $600,000 in its budget, on top of the $400,000 deficit dealt with in tier two.
Officials have come up with cuts in services and changes totaling $727,496, providing coverage for up to a six percent deficit in revenues.
BG plans cuts in services
City officials want voters to know that proposed cuts in services and other reductions in the 2010 budget are not punitive, if the November income tax levy fails.
In an eight-page letter to council members outlining the city's plans to deal with its 2010 deficit, Municipal Administrator John Fawcett wrote, "We are trying to maintain as many essential services as possible and these reductions are designed to eliminate and/or reduce items that may be more discretionary.
The following are proposed changes if the levy fails:
¥ Police Division changes, eliminating school crossing guards, saving $36,000.
¥ Fire Division changes, saving $48,742. This includes making the primary focus of the Pearl Street station to be emergency medical services and keeping only three firefighters there instead of four, since three such personnel go out with each ambulance run. Reductions will also be made in overtime costs and reduced purchases of small equipment.
¥ Public Works/arborist changes, saving $72,525. Changes in services include closing the yard waste drop off; eliminating city funding of the resident brush drop-off program at the landfill (residents would pay the cost if they use the landfill); eliminating two of the three heavy-item collections; eliminating one of two brush pick ups; and minimizing landscaping improvements in the city.
¥ Other reductions, saving $92,600, include fireworks support, reductions in information technology and miscellaneous general and reductions in budgets for council, clerk, mayor, municipal administrator and personnel.
¥ Non-replacement of retiring personnel, including a Public Works equipment operator and a firefighter, for salary/fringe savings of $327,629. This also includes delayed hiring/realignment of duties of the city planning director, city surveyor and a clerk at municipal court.
¥ Temporarily shift certain police expenses from the General Fund to the Police Levy Fund for a savings of $150,000.
The letter indicates "income tax funding to the General Fund has not seen a change for close to 40 years," though safety levies approved in the 1990s relieved some pressure on the General Fund and allowed those departments to expand.
It also states that the city is not looking to the temporary income tax increase to solve its financial problems, as "many proactive measures have been taken and we will continue those efforts in coming years."