I recognize you are trying your best to balance the city budget. And I also recognize you inherited a financial crisis that had been somewhat hidden by past political fluff. I believe it may help you if you had a better understanding of key decisions that occurred before your tenure, namely during the budgeting of 2011-12 fiscal year. I’d like to clarify some misconceptions about that process from my viewpoint and its impact on the deficit.
The 2011-2012 budget passed in a 3 to 2 vote by Council. The minutes of 9-26-2011 address most of the key issues of that meeting. However, some key decisions were omitted from the minutes. During that meeting significant funding changes were made, namely:
- The addition of two full-time positions.
- Excessive salary increases for City Administrator and Director of Public Works. The salary package of the City Administrator and Director Public Works combined equaled 25{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of the total property tax revenue of the city.
- Escalation of remodeling costs of the public works building went from $40,000 to $80,000 during the budgeting process. (subsequently the costs escalated to near $200,000).
- Budgeting of $40,000 for electronic water meters (which I believe were reallocated elsewhere later).
- Budgeting of $175,000 for improvements to city’s water distribution system (I do not believe this money was ever fully utilized for water system improvements).
- Budget transfer of $500,000 reserve funds to general fund.
As a result of that meeting, in my view, the city’s fixed costs began to exceed its revenue. The increases in fixed costs associated with excessive salary increases and adding two full-time positions were a big part in the budget elevating into the recurring deficit column. In addition, the city went from a one-building operation (city hall plus police station in one building) with a garage containing a break-room with an window air conditioner (old public works building) to: a three-building complex. I suspect the operating costs of the three-building complex, albeit much nicer and more efficient, added an estimated 25{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} in utility, equipment, insurance, etc. fixed costs. The new police station was a bargain funded primarily with grant money with limited cost to Shoreacres’ taxpayers. It is an asset to the community but nevertheless it is an additional recurring fixed cost.
It appears the city’s water system will be the Achilles’ heel for years to come and will be a repeated high repair cost item. In essence, it will be another substantial annual fixed cost to the city. Also, other fixed costs such as trash pickup have increased substantially. Unfortunately, the city’s revenue has not increased substantially.
I am aware of the 2013-2014 budget cuts that have already been made by Council. Now, what is left to achieve a balanced budget? As I see it, the only significant fixed costs that are left for Council to cut are in staffing, salaries and benefits.
The audit reports provided by CPAs Pattilo, Brown & Hill contain the most accurate annual accounting information available to Council. I encourage Council to have the 2012-13 audit completed ASAP so it is available to aid Council and the Mayor in managing the finances of the city during the 2014. Also, I encourage you to reevaluate your budget early in 2014 and, if warranted, modify the budget by cutting additional expenses wherever feasible. I believe it would be helpful if the annual audit report for 2013 is available at the time of the reevaluation and suggest require the City Administrator to provide quarterly balance sheets of the General Fund and the Utility Fund for your review. I believe you need this information to fully understand the financial condition of the city.
Thanks for reducing the budget several thousands of dollars thus far and overseeing the city during this critical period. I realize this process is a burden on you and your families with limited rewards but I and many other citizens appreciate your effort.
Gerry Victor
Shoreacres, TX