Revenue shortfall paints bleak picture

HIGH SPRINGS – Based on current trends, the City of High Springs could find revenues falling short for the 2011-2012 year, stated finance personnel during a budget workshop held Thursday, March 29.

City finance director Helen McIver warned that the city’s general fund could come in $75,000 short if the revenue inflow continues at the current pace. The budget report reflects some revenue items being reported at 50 to 97.12 percent uncollected.

She said the some of the concerns stemmed from franchise fees, tag agency and state revenue sharing. In franchise fees, the city could miss the anticipated budget target by $40,000, in large part because a 25-year contract with Clay Electric sunset earlier in the fiscal year.

The tag agency has seen declining revenues because people can now renew their tags online, said McIver. The tag agency has currently collected only 28 percent of the anticipated $65,000 of revenue budgeted for the year.

The inflow of tax revenues will increase during the next couple months, said McIver. But it will probably not increase enough to cover the entire $75,000 deficit predicted at the current time.

Although the city’s fiscal year budget is on an October through September annual cycle, both McIver and City Manager Jeri Langman said it is too early to predict how the city stands in terms of its yearly revenue.  Usually, Langman said, the budget process is not started until around June.

The city is working to ensure that the General Revenue Fund stays on par with the budget by cutting back on spending. McIver said the city can warn departments that funding for certain projects is no longer available. For example, if a city vehicle breaks down, it will have to be parked instead of repaired.

Staff said the city could determine if there are unspent, undedicated funds elsewhere that could be transferred to the General Revenue Fund, and there is money remaining in contingency that could be transferred if necessary. As a last resort, the city has money set aside in savings, part of which covers two months’ operating costs in case of emergency, staff reported.

Vice Mayor Bob Barnas said he would prefer that the money set aside in savings remain untouched.

Barnas warned during the budget workshop that the city may see layoffs, pay cuts and department consolidation. He said if the city was a business, it would have no choice but to lay off, cut back and consolidate in such a situation.

However, Langman said that over the last three years, there has been a tremendous amount of layoffs and cutbacks.

The city identified other departments falling short on budgeted revenue as well. The wastewater system’s total revenue is currently at 75 percent unearned as of a recent monthly recap report.

McIver states that the sewer account is in the current situation because rates were budgeted to be increased, but the current commission voted in December to not raise them. Also, additional users who would create addition revenue were expected to be added on to the sewer system, but implementation of Phases 4 and 5 were halted due to the USDA withdrawing the $1.6 million needed to complete the work.

The current budget report accounts for six month’s of revenue from the projected additional users at approximately $38,000. That money will remain uncollected. McIver said if the $38,000 in projected revenue and the anticipated gain from a rate increase were to be removed from the budget, the sewer account would be on par with where it was last year at this time.

Langman said the city is working on coming up with solutions to the budget shortfall. She said in the near future, the commission will be looking at capacity fees on vacant lots and a sliding scale for the sewer bills. Currently, water rates are tied to the sewer, and the city sees a decrease in the amount of water used as a result of customer concerns of high bills. The commission will discuss the possibility of adjusting that system.