Fayetteville’s diminishing budget approved July 15 is a sign of the times. The City Council trimmed approximately $400,000 off last year’s budget to come in at $9.7 million in the General Fund.
The $9.7 million General Fund budget that takes effect Aug. 1 represents a decrease of 4.6 percent over the $10.12 million budget from Fiscal Year 2010.
The hiring freeze, implemented several years ago, will continue, with the loss of four more positions through attrition. And again next year, the budget proposal included no cash payment for annual leave, no increase in employee benefits, a reduced match on the retirement plan, no out of state training or travel and no contributions to non-profit organizations. The General Fund is debt free, Robinson said.
Contained in the budget is more than $47,000 from the unreserved fund account. That leaves the account with $236,000 along with three months of operating capital. The council has been using portions of the city’s reserves since the beginning of the recession.
Finance Director Lynn Robinson said property tax revenues have fallen significantly. Decreasing tax digest figures showed a -.78 percent decrease in FY 2010, with a projected -8.89 percent decrease for FY 2011 due to falling property values.
Falling revenues would require a millage roll-up of approximately .29 mills just to break even with last year. If approved later this year when the tax digest numbers are in, Robinson said the break-even rate would go from the current 2.988 mills to 3.280 mills. Robinson said that even with the roll-up in the millage rate the only way a person would pay more in city property taxes is if the value of their property increased.
Robinson said city sales tax, building-related fees and property tax revenues continue to be impacted by the recession. Local Options Sales Tax (LOST) revenues were down 9.88 percent for calendar year 2009, but showed some recovery in the first four months of 2010, she said. Robinson is projecting a 7.44 percent increase in LOST revenues for FY 2011.
Robinson said Water and Sewer revenues continue to be impacted by the economy, conservation and weather conditions. Impact fees and Sewer Proportionate Fees are also being negatively impacted, she said.
Budget reduction measures previously implemented include a citywide hiring freeze, the reorganization or realignment of several city departments, no payment for annual leave, a reduction in future salary increases, voluntary reduction in salaries and reduced work hours and increased benefit costs to employees.
