Politics & Government

Finance Director Says 2012 Expenditures Are Balanced

Jeff Smith said anticipated $900,000 overspending can be offset, but revenues are expected to fall $3 million short

The city will be able to keep expenditures in line in the current fiscal year budget but is still facing an estimated $3 million revenue shortfall, Finance Director Jeff Smith told the Finance Committee on Monday.

In a memo to the committee, Smith said the current estimates show that the city will exceed its expenditures by about $900,000 at the end of the 2012 fiscal year on June 30.

“It is important to point out that estimates are just that—estimates. And predicting the future is hardly an exact science,” Smith says in the memo. “With that said, we have asked the departments to review their expenditures through the end of the current fiscal year. The result of this exercise is a decrease from our previous estimate of two months ago.”

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Smith said the deficit can be closed by about $1,038,000 in savings. He said this can be done by reducing funding to health insurance and workers compensation by $200,000 and $500,000, respectively, as a result of current vacant positions. He said the city can also save $370,000 through its process of refunding bonds and has a balance of about $168,000 in forfeited 401(a) retirement accounts.

Smith said the expected revenue shortfall of $3 million includes a projected shortage of tax revenue collection in the “high $700,000s.” The city has also collected $1.6 million in distressed municipality grants, $600,000 less than anticipated.

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In addition, the city is currently projected to have a in the 2011 fiscal year budget. The audit on that budget should be completed by the end of the week.

Ron Nossek, a city auditor, said the property tax calculation was flawed since it was based on pure gross and also included money collected from the City Center District. Nossek advised the committee to avoid one-time revenue sources in its projections.

“Carve all that junk out of the budget,” he said. “Be realistic about what your revenue stream is going to be.”

Councilor Adam Sprecace said he wanted to see a more detailed report on where departments found savings in expenditures, noting that the projected overspending was $1 million less than the January report.

“I would like a better understanding of where every dollar in the city is and where it goes,” said Sprecace.

Smith said it is impossible to project a budget with absolute certainty, and that the exact figures are only available after the end of a fiscal year and the ensuing audit. He said he has been working to provide the committee with updated information on the current fiscal year, but that he also needs to start work on a proposal for the 2013 fiscal year budget in order to present it to councilors by the mandated date of April 1.

“I’ve either got to continue to work on last year or start on next year, and there isn’t really time to do both,” he said.

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