'Tough' choices ahead
City council to review budget line-by-line

Tuesday’s special meeting of the Lake Havasu City Council took a close look at where the city may do some cost cutting in the coming fiscal year.

The meeting served as an introduction of line item functions, services and programs the city provides during the year and the financial cost of those functions, services and programs.

“We are going to be aligning our budget dollars with council goals, and this is the first step in that process,” Finance Director Gayle Whittle said. “We’ve always tried to do that, but this year we’re going to try and do that more hand-in-hand than we’ve been able to in the past.”

Whittle prefaced the meeting by addressing the current economic conditions and recession the country is facing. She pointed to the state outlook being very grim with a shortfall of $1.2 billion for this fiscal year and $2.2 billion for the coming fiscal year.

“The outlook on the local level is not as bad as the state, but sales tax revenues are down, which is our major funding source for the general fund,” Whittle said.

Sales tax collections are actually down around 15 percent from the 2007-08 fiscal year and 30 percent from the 2006-07 year.

Whittle said the general fund revenue snapshot indicates the city is holding its own. She provided an update to the council that indicated both revenues and expenditures are currently down, since the beginning of the fiscal year July 1, 2008.

“We are still spending less than we are taking in, but we still have the subsidies to transit, the airport and Aquatic Center that we haven’t made this year, and we need approximately $3 million by the end of the year to do that,” she said.

As of the end of December, the city has about $200,000 available in the general fund.

Whittle noted the bottom of the recession is not expected to occur until mid-late 2009. She said recovery lags a little bit at the state level, so it would likely affect two budget cycles for the city.

The city department heads have been taking a fresh look at how their departments spend money in the last 12 to 18 months, which Whittle stated was the first step in looking how to solve some of the budget problems.

“I firmly believe we cannot improve how we operate city government, unless we know how we operate and how much it costs us,” she said.

Whittle asked each of the department heads to look at each function, service or program provided and attach staff time to it, first defining what was done and how much time it took.

Afterward, Whittle said the department heads looked at their line item budgets and allocated the line items needed to perform different services, before attaching specific monetary amounts to perform each task.

The line items services and functions were broken down into four sections for cost-recovery, 100 percent recovery, partial recovery, tax-supported and future services, programs or functions the city should apply fee requests to.

Whittle said they needed to look at how these programs, services or functions affect the overall community, focusing on who uses these services, what is the overall cost and if it is worth the price tag to the city and if the services are mandated or need to be mandated.

They also would need to look at what programs, services or functions should be 100 percent cost-recovery, tax-supported, partial recovery or fee applicable and if all are necessary.

Whittle pointed out fee changes could be made to any of the programs, services or functions in all four sections, if the council wished. Programs such as sewer and water system analysis are slated to recover 100 percent of their costs. If the city were to no longer perform a task such as this, the financial responsibility could fall upon the individual applicant.

Whittle pointed out the city has taken retroactive steps in preparing for a budget reduction. The council adopted a fiscal sustainability policy in 2007, the city implemented a zero-based budgeting approach for the street department in 2008, the council approved an ICMA study of safety operations and the city began its evaluation of cost-services in preparation.

Whittle also pointed out the city has begun to do a more program-based budgeting approach for the future. They have turned to the community for input on infrastructure projects and facilities services.

The cost of services review Tuesday was just the first step in the finance department’s attempt to obtain direction from the council as to how the city will deal with the current economic conditions in the coming fiscal year.

Jan. 19, council will hold a retreat to further discuss where cutbacks can be made in services and programs and what programs or services could be cut altogether, if any.

“We are going to have some tough choices to make in the coming year,” Whittle told the council.

Current Rating: 0 of 0 votes!

Rate File: Select Rating: * ** *** ****