Friday, Feb. 15 2013 8:42AM
City warns of budget shortfall
By Russ Pulley
A faltering economy and mild weather are putting Lee’s Summit officials on alert for possible spending cuts.
Cold weather in the next month and no snow could, however, turn around the short-term problem.
The city’s Budget Committee on Feb. 11 began work on next year’s spending, getting reports on expected insurance costs for liability insurance and employee health plans.
Sharon Quigley, assistant to City Manager Steve Arbo and Nick Edwards, a management analyst with the city, also gave a six-month report on the city’s general fund budget of about $59 million.
The Finance Department projects both revenue and expenditures to be under budget, but resulting in a net loss of $275,185, Edwards said.
Reserves could be used to cover the deficit. Or the revenue picture might improve, depending on conditions that prevail during the second half of the fiscal year.
The situation prompted Budget Committee Chairman Bob Johnson to send an early warning regarding his budget priorities.
He said the city could eliminate branding from its budget. And it could quit giving away revenue “to certain kinds of businesses.”
“This city should not pay for 100 percent of branding next year,” Johnson said.
The Lee’s Summit Economic Development Council did contribute money to branding, but it also gets a subsidy from the city for its operations. The Chamber of Commerce agreed to transfer marketing money into branding, but the source of that money is a city tax on hotel stays.
Edwards said the city had hoped the economy was beginning to rebound and projected a modest 2.5 percent growth in sales tax revenue. But that hasn’t developed. But, he said, the city still has a chance to catch up.
For example, the Public Works Department has $235,000 budgeted for more snow removal. If there are no more snow events saving that expenditure is a big help.
New job vacancies could help, while other factors could hurt. Warm weather would reduce the franchise tax on utilities.
“Cold, not snow, that’s what we’re hoping for,” Quigley said.
City Manager Steve Arbo said money saving measures that could be taken without hurting service could be offering early retirement packages to some employees, where jobs would be backfilled with new employees who’d cost less on the salary scale.
Johnson said perhaps there could be could be attrition of positions, such as eliminating a deputy director, should a person in that job retire.
Councilmember Dave Mosby asked if there could be any way of making more a more immediate impact on direct costs. He noted that savings from adjusting insurance programs or early retirement would be realized later in the next budget years.
“We need to do it now,” Mosby said.
Arbo said that because a large percentage of the general fund is for personnel, the only quick way would be to reduce jobs.
“We’ve exhausted looking for the painless penny,” Arbo said.