City faces budget deficit for 2011
The city government is looking for ways to cut day-to-day expenses, after business-license revenues came in below expectations.
And looking ahead, Chief Financial Officer Steve Bedard said the process of crafting a budget for 2011 is not going to be pleasant, because further cost-cutting will be needed.
He said he could not rule out the possibility of recommending tax or fee increases to City Council later this year.
"We're starting off in the hole," Bedard said. "This is not going to be a fun process, and we're going to have to recommend some cuts."
The city's budget runs on a calendar year, unlike most other local governments, so the 2011 budget would be for the 12 months starting Jan. 1.
With five months left in the current budget year, the city is looking to make up the shortfall in business-license revenue.
"We need to find about $2 million, and that's what we're shooting for," Bedard said. "Going forward, we are looking at pulling back everywhere we can in the expenditure column."
To balance this year's budget, City Council last fall approved employee furloughs, mostly accomplished by not paying employees for some holidays, and approved an increase in the city's franchise fee.
At a budget update for City Council on Tuesday, Bedard said this year is the first time the city has ever underestimated business-license revenue, which is based on business receipts from the prior year.
He said the estimate was about $1.8 million too high.
The city now expects to collect $23.6 million from business licenses this year, a decline of about 12 percent since 2008, reflecting the deterioration of business conditions during the recession.
On the brighter side of the ledger, Bedard said the city closed the books on 2009 several million dollars better than expected, due to cost savings on fuel, health care and personnel costs.
"We actually added $1.1 million to our fund balance," Bedard said.
The city maintains a more than $18 million fund balance in case of hurricanes and other emergencies.
