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Bare-minimum revenue projections hint at scale of upcoming city cuts
The city is one step closer to becoming a bare-bones organization.
On Tuesday, administration officials brought forward a baseline revenue projection that is drastically lower than current 2009 revenue estimates.
Right now the city is operating on projections that anticipate about $18 million in non-obligated tax revenues for 2009. However, Administrator Mark Dombroski estimated a baseline revenue projection of roughly $15.6 million – a difference of $2.4 million. The $18 million figure already takes into account roughly $1.8 million in revenue assumption decreases approved by the council at the end of January.
"It's so terribly sobering to see how large the gap still is between where we are now and where we need to be to by the end of 2009," said council member Barry Peters. The city made $2.3 million in budget cuts at the end of January in an attempt to shore up its declining tax-supported general fund.
The question now becomes what assumptions the council will choose to base future cuts on, and how they will react to those adjusted assumptions.
The city and council anticipate passing another cost-cutting package at the end of March that will likely affect personnel, community service organizations and city-supplied services.
If councilors choose the most conservative revenue estimates put forward by the city, that could mean paring an excess of $3 million in assumptions and related expenditures. But the real question is how the council will spread the cuts, and what year-end revenue targets they are trying to achieve.
"If you were to go straight to total baseline assumption, it's like solving the greatest economic downturn since the Depression in one year," said Finance Director Elray Konkel. "But if we go right to the baseline and cut another $3.5 million out of the budget, that will be dramatic."
Council members reiterated that all options would be on the table, including renegotiating or canceling contracts obligating a portion of city revenues to community service organizations.
Next Wednesday, the council will decide where they want to set their revenue assumptions and their targets for the year-end cash balance.
Based on that, an all-day financial session is tentatively planned for March 18. At that session, councilors will decide how to cut expenditures to meet those assumptions.
"We must act urgently this month. For every month we draw out this decision we are making the decision more painful," Peters said.