Officials: Proposed budget is a deficit spending plan
City Council dove into the mayor’s proposed budget, reaching nearly $28 million for 2020, saying Monday night it was a deficit-spending plan.
“We know some of those things are not going to happen,” Council President Randall J. Allison said of revenue projections and expenditures.
Mayor Gabriel J. Campana proposed a $27.9 million budget, which holds the line on real estate taxes.
It preserves the 15.47 mills rate, meaning it will cost $1,547 a year for the average household assessed at $100,000.
But when a slide presented by the city finance department showed that revenues must be about 2 percent higher and expenditures kept under about 6.5 percent, council was skeptical.
“We are changing a $2.6 million budget fund balance and carrying it over to a $163,000 fund balance,” said Council Vice President Liz Miele.
For seasoned members of council and novices, it was alarm bell.
She noted the $27.9 million proposal, but projected income at $25.4 million.
Auditors indicated to the finance committee recently that if the city does not bring revenues in over 2.2 percent and keep expenditures under 6.5 percent, the city is deficit-spending to meet the no-tax increase, she said.
Over the past five years, William E. Nichols Jr., city finance director, and Joseph Pawlak, city fiscal and budget officer, have helped to pad the budget with actual ending fund balances at, near or exceeding $2 million.
“But at some point, there won’t be that much padding,” Miele said. “I can say it won’t be rosey if the fund balance is $163,000,” she said.
Nichols agreed with Miele.
“We should have a $500,000 ending fund balance,” he said, adding it makes it difficult going forward.
That was a message for the administration of mayor-elect Derek Slaughter.
“Our starting balance is significantly higher than ending balance,” Nichols said.
“It shows an impact on the ending balance,” he told the Sun-Gazette.
“Such impact will make it more challenging in the following year to balance the budget,” he said.
More than $18 million is attributed to salaries, benefits, health care and pensions, Nichols said. Salaries are increasing contractually between 2.5 to 3 percent, he said.
The proposed budget reflects inflationary pressures and collective bargaining unit requirements.
Savings, however, may come by way of contraction negotiations and revenue from building permits and fees increasing, according to the finance director.
The administration has budgeted conservatively, using a “3 percent rule,” or building a budget hoping to achieve more revenues more than what is budgeted for and less expenses, Nichols said.
Slaughter has the opportunity after taking the oath of office in January to reopen the budget and make changes.
“The incoming mayor has 12 months to continue to evaluate the budget from day one to see what savings he can achieve so that ending balance in the next year will be much higher,” Nichols said.
As he leaves office, Campana’s department expense was projected at $325,015.
“I will be remiss if I do not comment on the line item for salaries,” he said.
Campana initially had a full-time executive assistant, but later hired two part-time workers, one putting in four days a week and the other working on Friday.
“That was to save dollars in the last five years because we had not had to pay health care,” he said.
The proposal is for a full-time executive assistant in the office, asking for $35,327 a year instead of the two part-timers at about $27,800.
That is a 22 percent increase or $7,466, Campana said.
“I’m not criticizing the value, but the increase does not make sense and is not consistent with other employees,” he said.