Finances were a central feature of the all-day retreat held March 11 by the Fayetteville City Council. Front and center in the discussion was the ongoing recession, its toll on city revenues and the measures taken to weather the recessionary storm.
City Manager Joe Morton said the biggest issue facing the budget is the tax digest. The current estimation for the digest shows a likely decrease in the range of close to 6 percent, he said. That potential comes on the heels of numerous significant budget cuts that began several years ago when the finance department and the council correctly anticipated what soon became a full-blown recession.
“It’s down to the bone now. The fruit is off the tree,” Morton told the council.
An example of the budget cutting measures previously implemented are the number of city employee positions that have been reduced. Total employment, in terms of full-time equivalents, sat at 163 in 2008 compared to 136 in 2011. The city’s public safety employees accounted for 54 percent of total city staff in 2008 and 60 percent in 2011.
An overview of the current General Fund budget for Fiscal Year 2011 by Finance Director Lynn Robinson showed the revenues continue to be impacted by the recession, especially those dealing with property taxes and building-related fees. Perhaps a bright spot in the conversation was Robinson’s notation that local option sales tax revenues in 2010 showed a degree of recovery, having increased 10.25 percent over 2009.
The real downside on the revenue front is in terms of the tax digest. The digest for Fayetteville in 2010 decreased by 8.99 percent and is expected to decrease by approximately 6 percent, maybe more, for the 2012 fiscal year that begins Aug. 1, Robinson said.
Further addressing the upcoming budget year, Robinson said she expected a 1.59 percent increase in local option sales tax revenues and a 2 percent increase in other taxes, including business taxes. There is no increase expected in franchise taxes or licenses and permits.
The city plans to continue a number of previously enacted budget reduction measures to help offset the decrease in tax digest numbers, commercial vacancies, residential and business foreclosures and the lack of housing starts.
Among the budget reduction measures are maintaining the hiring freeze, across the board reductions in budget categories, the early retirement incentive program, voluntary furloughs and reductions in pay, the reorganization of a number of city departments and increased employee benefit costs.
The council since before the recession began has guarded the unreserved fund balance. That balance sat at nearly $451,000 in FY 2010 and has decreased to $192,151 with the FY 2011 amended budget. Robinson’s forecast shows the unreserved fund balance increasing to approximately $245,000 next year and on to approximately $450,000 by 2015.
Continuing with projections, Robinson noted the potential for a slight recovery in the growth of the tax digest in 2013, perhaps in the range of 1 percent, and an increase of 2 percent in local option sales tax revenues and business taxes. And further out in 2014 and 2015, Robinson’s forecast showed small but steady growth in the tax digest and sales tax revenues.
Revenues from the FY 2011 amended budget that totaled $5.32 million could see an increase to $5.67 million by FY 2015, Robinson said.
