At the May 24 City Council meeting, City Treasurer Martin Lyons presented the year-end budget figures for the 2009-10 fiscal year, which ended on Feb. 28 of this year. The report shows that the City ended the year with a deficit of $2.9 million in its General Fund, its main operating fund.
He said the deficit can be accounted for as follows:
• Property tax revenues were $500,000 less than anticipated. Mr. Lyons said this may be a timing issue, and that some of these taxes may be collected in subsequent years.
• The land sale of 425 Dempster St. (the site of Chiaravalle Montessori School) for $1.9 million, which the City anticipated would close last year, occurred this year.
• The City reduced expenses in the General Fund by $2.6 million rather than by the $3.1 million anticipated.
General Fund revenues for the City dropped by about $4.5 million between fiscal year 2008-09 (audited) and fiscal year 2009-10 (unaudited), according to information presented by Mr. Lyons. Audited figures for fiscal year 2008-09 show General Fund revenues of $88.5 million, but only $84.1 million for 2009-10.
Continued unemployment, reduced consumer spending and the general downturn in the economy account for other shortfalls in the City’s revenues, Mr. Lyons said. Decreased revenues from real-estate transfer taxes, building-permit and other permit fees, interest income, and state income tax and state sales taxes (remitted to municipalities) reflected the economic slowdown: Real-estate transfer taxes produced only $1.6 million against the $3 million budgeted. In addition, the budget anticipated $7 million in state income taxes but the City received only about $6 million. Revenues from the home-rule (City) sales tax were only about $260,000 lower than the budgeted figure of $5.7 million.
Mr. Lyons said the City “should expect to end the [last fiscal] year with approximately $11.4 in unrestricted, undesignated fund balance, which will be about 13 percent of the City’s general operating expenditures.” City policy, he said, is to have a reserve of about 8.3 percent of operating expenditures. He said the fund balance would be increased by the $1.9 million proceeds from the sale of the 425 Dempster St. property and by the receipt of any property taxes owed last year but paid this year. He said staff recommends that Council discuss the disposition of these funds and decide whether they should be allocated as capital, operating or reserves.
There was little aldermanic comment about the report. Alderman Coleen Burrus, 9th Ward, said City staff had done a “great job” on projecting expenses last year but seemed to have fallen down with respect to revenue projections. She asked whether the same criteria had been used in preparing the present year’s budget.
“No,” Mr. Lyons said. “The methodology we used in 2009-10 was to look at a particularly bad budget, but we did not anticipate how bad things were going to get,” he added.
For next year, residents can expect increases in the City’s portion of the property tax, City officials have said for the past several weeks. In addition, water rates may increase, as budgeted expenditures in the water fund exceed budgeted revenues and the City expects to draw on about $2.6 million of the $6 million reserves in that fund. The parking fund also showed a loss last year, and the City is looking at additional means of generating revenues for the parking fund.
A report on the first quarter of the present fiscal year is planned for a special City Council meeting on June 21. At that meeting, plans for the 2011 budget year will likely begin, said City Manager Wally Bobkiewicz. He added that he would like to see fiscal year 2011 as a 10-month year, ending Dec. 31, 2011 rather than Feb. 29, 2012, and would also like to have subsequent fiscal years track the calendar year.