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The City released its first quarter financial report for 2012 on May 21. The good news is that the City is currently on budget, with revenue slightly ahead of quarterly expectations and spending slightly off.
The good news is tempered by the fact that summer months often increase spending due to seasonal hires and police overtime. Further, the City’s property tax collection, split in half rather than quarters and front loaded, means the revenue is expected to be higher in the first quarter.
As a result, the report concludes, “It is too early to draw any meaningful conclusions or projections” regarding the City’s overall 2012 fiscal health.
Sales tax collection and building permits both failed to meet 25% of budgeted amounts. More building occurs in the summer months, however, and the holiday season impacts sales tax revenue, tempering concern.
Other factors contribute to a cautious optimism about the City’s fiscal health. “We’ve been settling claims,” said Marty Lyons, the City’s chief financial officer. Settling claims removes some of the uncertainty inherent in the legal process.
But a proposed state law that would limit the amount of state income tax flowing to municipalities, an issue raised by Mayor Elizabeth Tisdahl, could result in a budget hit. “It used to be that 10 percent [of state income tax was] designated for municipalities. Now it’s been reduced to 6%,” she said. If the new proposed cap passes, the City’s share “goes below 6 percent.”
But the state measure has not passed, and the current budget numbers are positive enough that the City proposed amending the budget and the Capital Improvement program to increase current spending. Both amendments were held by Council, however, because the hour was late and Alderman Ann Rainey, 8th Ward, asked for the opportunity to discuss proposals regarding the Howard-Hartrey TIF with her ward before Council took up such changes.
The budget amendments will return June 11. For now, the City accepted and placed on file the first quarter financial report.