City's 2008 budget back under review

The city commission meeting held Tuesday, Nov. 4, brought bad news to the city. Because of decreased revenue and increase expenditures the city is now facing some budget cuts with two months remaining in the year.

At the commission meeting, Director of Finance Susan Brown presented a 2008 budget update to the commission. In her presentation Brown said the economic situation has effected the city as well as the consumers. The city has seen a decline in the anticipated cash carryover into the 2009 budget.

The cash carryover for 2009 was budgeted to be $716,387, however, currently the city is looking at an anticipated carryover of $367,776, slightly above half the anticipated amount.

Cash carryover is the money utilized in the following year's budget and operations. Similar to a personal check book, the cash carryover is like the money that is left over after paying the bills.

"(Cash carryover) affects next year's budget if we don't do something about it now." said Brown. "We're not going to have that carryover the way we're going."

Brown said the interest rates are very low causing the city's revenue to decrease. This decrease in interest was anticipated when building the 2008 budget, however it still has adverse effects.

The biggest factor could be the city's expenditures which have increased beyond the anticipated amount. This increase is attributed to the rising cost of fuel. According to City Manager Joe Turner, the budget did not anticipate the amount gasoline would increase.

"When we did the (2008) budget, fuel was just beginning to rise," said Turner. "We didn't realize it was going to rise to the extent that it had."

The storm damage from winter and summer have also caused a significant increase in the city's expenditures. This was due mainly to the cost of overtime to the employees in efforts to quickly clean the damage as well as renting equipment. The city did receive some assistance from FEMA, but, not all of the damage qualified for federal aid.

"The summer storm hurt us really bad. We had a lot of overtime to get the storm cleaned up quickly," said Brown.

The city has begun changes in the current budget attempting to regain some carryover. Brown said the city department heads have been contacted and advised to cut overtime hours unless it is absolutely necessary, all part-time employees have been laid-off, a hiring freeze has been put on the city and a freeze has been put on expenditures with the exception of operating costs.

"These are just some places that we can go in and save some dollars," said Brown.

The biggest impact will be the cutting of capitol improvement projects. Capitol improvements make up the largest impact on recovering from the shortage.

"You have to look at large ticket items to cut out of the budget. And most of the time, they are capitol improvements," said Turner.

This cut does not come with out a cost. The long-term effects of this cut will result in capitol improvements will be pushed back.

"The problem is ... you're just delaying the problem," said Turner.

Not all capitol improvements will be cut. Some will be moved to 2009 or later. As a result, a portion of capitol improvements slated for 2009 may be cut.

According to Brown, a re-evaluation of the capitol improvements will be done at the beginning of January. The evaluation will assist in determining which projects will be moved.

The city of Fort Scott is not worried yet. According to Turner, this is somewhat normal for city governments.

"As a city manager, I've frozen expenditures in December every year," said Turner.

The shortage in carryover does impact the 2009 budget and if they are not addressed now, it will have to be addressed at the beginning of 2009, said Brown.

"This is just a preventative measure to make sure we come in on target and next year could be bad if we don't," said Brown.

Turner agreed, adding, "financially, the city is still in good position, we just want to stay there."

The effects of the changes should be known soon. According to Brown, the city will see results when the month-end close out numbers are finished.

"On the bright side, other cities and business are worse off than we are," said Turner.