In their approving on first reading the city’s 2018-19 annual budget, City Manager Ron Nalley told commissioners the city is in a precarious financial situation all around, and he outlined a series of immediate steps to control the spread of red ink.
He said audited fund balances, for 2012 to 2016, show the general fund is continuing to lose money. He said an audit for 2017 will likely show the city has less than the roughly $383,000 fund balance it is projected to have at present.
“Our number one priority is to resolve the sewer debt default,” he said. “The general fund is also not in a strong financial position.
“Cash balances have propped up the general fund. We’ve been transferring from one fund or another to prop up this fund,” Nalley said. “You’re not looking at a pretty picture.”
He said the city has only about $12,000 to $15,000 in the general fund in the bank, with about $145,000 in accounts payable due in the next couple months. He said about $90,000 in revenue is expected in the next few weeks, but that September would likely show a deficit of $36,000.
“We are hoping that we can float ourselves until November. Unfortunately we are two months behind,” Nalley said.
To improve the budget picture, Nalley said he has cashed in about $300,000 in certificates of deposit, which after deducting about $180,000 for the city’s line of credit, will free up about $120,000 to meet payroll and other bills in accounts payable.
In addition, he said he has commenced immediately to eliminate all overtime, cut non-essential expenditures and the use of non-essential facilities, dispose of surplus vehicles and equipment, eliminate non-essential travel and training, reduce IT services and facility maintenance, combine vehicle use by employees, review the city’s policy on employees taking home city vehicles, and delay capital expenditures.
“This is a bitter pill to swallow,” Nalley said. “Department heads recognize that and are willing to accept the challenge.
“They know I’m serious. I’ve begged them to have something ready for me. By next week departments will have a full list of vehicles and equipment that need to be surplussed,” he said.
He said he plans to reevaluate within the next three to six months a second list of priorities that could include personnel cuts.
Nalley said the lobbyist and building inspection services could be considered, as well as staff reductions to library, police, planning and zoning, administration and public works.
“If we don’t see the cash situation improve, we’ll have to evaluate and eliminate staff positions,” he said.
He said the city may want to start looking closely at a retirement buy-out program that could be put in place with employees who have from 25 to 28 years of service. “We don’t have the money to buy out people,” Nalley said.
He also said the evaluation would include controlling costs for the CRA (Community Redevelopment Agency) and looking at all fees, including facility rentals.
“We will reverse negative cash flow trends,” Nalley said. “Residents and visitors may see some reduction in services. We do expect to have our financial house in order.
“It’s just about operating more efficiently,” he said. “We’re getting there slowly but surely, but it’s going to take some time.”