A month into the new fiscal year, city officials are nervously eyeing a potentially huge gap between rising expenses and shrinking revenues.
Not even counting the Board of Education, which will need at least a few million dollars just to maintain current programs, the city is eyeing a potential shortfall of $8.6 million for its next budget.
That’s enough to hike property taxes “a little over 2 mills right off the bat” next year, city Comptroller Glenn Klocko told a department head meeting Tuesday.
But officials said they have no intention of allowing taxes to go up that much.
Keeping the tax rate down is going to be a long, hard haul, they said, requiring every department to rein in spending everywhere it can and to search for ways to save more.
“I have to believe there are savings throughout the city,” Mayor Art Ward said.
The mayor said the next budget “is going to be, probably, worse than” the long slog that went into delivering this year’s property tax freeze.
Part of the problem for next year is that the city snatched $1.9 million from its rainy day fund to cover expenses this fiscal year, along with another $600,000 for public works vehicles.
The vehicle expense may perhaps prove unnecessary next time around, but the city needs an additional $1.9 million to make up for money it can’t again take out of the emergency account. That has to come from taxes unless spending cuts are found.
Beyond that, city officials anticipate that employee health care costs will rise as much as 12 percent in the fiscal year that begins in July 2010. To pay for it means another $2 million from the taxpayers.
Klocko said he also anticipates union contracts will rise, adding another $800,000 or so to the total. He also said, though, that “something similar” to this year’s wage freezes may be necessary.
State aid to the city is likely to sink by $1 million or more, he said.
Energy costs make up most of the rest of the anticipated shortfall.
“You can see these numbers are starting to total up,” Klocko told city supervisors at the monthly department head meeting.
He told department chiefs to be creative in searching for ways to cut spending or increase revenue by raising fees or offering more service.
Ward touted the success of the fire department in handing over $150,000 for the past fiscal year that it didn’t need to spend.
“We had substantial savings all along the line,” Fire Chief Jon Pose said.
“I’m expecting that from most departments,” Ward said.
The Board of Finance plans to begin its annual budget process this month and finish a draft budget by February in order to give the city time to explore alternatives that might cut costs through streamlining administration.
A final budget for the 2010-11 fiscal year won’t be approved until at least mid-May and perhaps not until June.
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