The city is operating under deficit spending right now and has no emergency fund built into its current budget, and city leaders must come together to present taxpayers with a more stable spending plan next year, City Controller Maria Brown said Wednesday.
"For a city of our size, we should have a fund balance of $3 million," she told the City Council at a special meeting.
Instead, the city is in the red $331,215 -- an unaudited number compiled by Brown but based on end-of-2004 projections.
The entire 2003 fund balance was used to pay for most of the difference of what was budgeted in the 2004 operating budget -- $61 million -- and what was spent last year -- $64 million, as well as to cover losses at both city parking ramps.
The large deficit is a result of the previous mayoral administrations' overestimating sales tax and revenues from the sale of land and at the golf course, while underfunding obligations such as a sanitation contract and workers' compensation, Mayor Vince V. Anello said.
Anello said while he tried to balance last year's budget, he could not maintain services and at the same time build a surplus into the 2005 operating budget.
He said the deficit was what eventually made him decide to cut the appropriation for the city libraries by nearly $1 million.
Anello also said when the City Council cut about $400,000 from the 2005 city budget of $70 million, instead of putting that money into a reserve account to be used for unexpected or rising costs, it used it to lower property taxes.
Having a fund balance -- or contingency fund -- is important for stability. Brown said her records show it has drastically fluctuated throughout the past five years.
At the meeting, Anello and Brown told Council members they want to include a contingency fund in next year's spending plan.
They invited Council members to attend preliminary work sessions at which the administration will begin to draft the 2006 operating budget, and offered to hold those meetings during the evening so that those who work during the day can attend.