The city council must prioritize what services the city will provide in the future to deal with declining revenue.
That's the message Administrative Services Director Karen Goschen delivered to the council during a July 13 presentation on policies for the 2010 city budget.
Goschen said the city's "sustainable revenue" - property and utility taxes and interfund service charges - accounts for only about 54 percent of its general fund revenue.
The remaining revenue sources - sales taxes, grants and permits, plan checks and other fees - account for the rest, she said.
The 2009 city budget was based upon 2008's declining revenues, but sales taxes are down considerably even from that - 21 percent less than budgeted so far this year.
Through May 31, the city projected to collect $1,114,800 in sales tax but has collected only $882,833.
That means an estimated gap of $850,000 between sustainable revenue and operating expenses, Goschen said.
The figure represents
about 11.2 percent of the city's $7.56 million general fund, which includes virtually everything associated with city government (except utilities) such as police, planning and public works, building inspections and parks.
"What are we going to do about the gap? It's too drastic to fix in one year. That's going to be the challenge during the budget process working with the council," Goschen said Sunday evening from her office at City Hall.
Goschen estimated that $1.2 million in city spending in the 2006 budget was based upon "nonsustainable revenue" such as sales taxes and fees.
If the council sets a new policy to have operating expenses equal sustainable revenue, then the city might have to change the way it does things, she said.
That could include hiring contract staff as funding is available, instead of permanent staff, or delaying capital projects, Goschen said.
The preliminary 2009 city budget included no capital projects and no employee layoffs in exchange for a reduced work week for one-third of city employees and reduced access for the public.
The full work week was restored when the city received additional revenue beyond what first was budgeted.
Reach Brian Gawley at email@example.com.
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