Spring Hill city officials need to save more than $50,000 between now and the end of December to close 2010 with a zero balance. The budget deficit is largely the result of sales tax revenues not meeting projections.
The 2010 budget was drafted and approved in August of 2009. Sales tax revenue makes up approximately 30 percent of the city’s budget and at the time, officials projected sales tax revenues in 2010 would remain stagnant.
That hasn’t happened. Instead, sales tax collections are down more than 6.5 percent compared to 2009 figures.
“That’s big,” Melanie Landis, city finance director, told city council members at a budget work session on July 15. “As of last year, people were saying were close to being out of the woods. We weren’t even close.”
And now, city officials are prepping for the 2011 budget.
Landis crafted a sample 2011 budget with a slight decrease in the mill levy, but that may not be the budget proposed by city staff or the budget adopted by council members. City officials will present a budget proposal to council at a meeting Thursday evening – July 22.
Landis said she’s not certain exactly what that budget will look like. The numbers she shared with council last week would be absolutely bare bones.
“It’s really easy to say, well we’ve cut expenditures. Our revenue has fallen and we’ve met it,” Landis said. “But we won’t always be able to hold the line.”
Sales tax forecasting hasn’t been the only challenge for city officials. For the last two years, overall property valuations have decreased. With a steady mill levy rate, the city receives less revenue than they did before. Overall, property values were down 1.6 percent in 2010 compared to 2009. In 2009, assessed property values declined more than 4 percent.
Landis said this year’s decline amounts to approximately $900 less per mill – or $35,000 less in revenue than the mill levy would’ve brought the year before.
At a budget work session earlier this month, city department heads detailed a list of infrastructure and operational upgrades that will be necessary in the next three years. Council members requested to see a pie-in-the-sky budget that would include funding a laundry list of projects.
However, council directed city staff to create a budget that maintains minimum levels of service with the addition of four new police cruisers. Four police cruisers, if approved for expenditure from next year’s budget, will be acquired through a lease.
Council also may purchase a car for the public works director as they’ve been paying mileage on a personal vehicle.
Although city staff requested a new car, Council member Scott Snavely said the city should consider purchasing a used car in Spring Hill for the public works director.
“You’ll be shopping at a local business, and not everybody can buy a new car,” Snavely said. “Everybody else is tightening their belts and this is one way we can tighten ours.”
Council members also suggested that the city decrease the amount it gives to outside agencies each year. For example, the city donated $2,000 towards the Fall Festival last year, and gave $4,000 to the Green Board.
Those payments will likely be decreased in next year’s budget. The city also donated $2,625 for utility assistance programs.
Property owners saw a dramatic 25 percent rate increase in sewer fees in 2010 in addition to the implementation of a $9 user fee. The budget numbers Landis gave council on July 15 assumed no sewer increases in 2011, however they assumed a 2 percent annual increase in the water fund next year.
Council is unlikely to make a decision on possible utility rate increases until October or November.
Council is expected to approve a 2011 budget during a council meeting this week. The council meeting will start at 7 p.m. at the Civic Center on July 22.
SH officials examine budget at work session