City prepares for coming budget shortfalls
By DEB WUETHRICH
Constraints on the city’s budget appear to be drawing ever tighter with the state’s economy and a few other factors, but Tecumseh officials are working on strategies to minimize the impact of falling revenues. Tecumseh City Manager Kevin Welch took some time at a study session before the Tecumseh City Council meeting on Monday night to address some of the things the city would be doing, and shared information regarding not only the current budget, but those to come in the next couple of years, with general fund revenue currently down $200,000.
“It’s unique to make budget amendments before our budget even starts,” said Welch. He said factors that had contributed to the problems include decreased tax revenue, decreases in state revenue sharing and fewer funds coming in for major and local highway funds from the state.
Welch said from a tax revenue standpoint, the city collected $3.8 million in 2005, and $4.1 million in 2008, but by 2010 that figure will drop to approximately $3.9 million and compared it to a bell curve.
“I’m not sure we’re past the curve yet, because the economy is driven mostly by declining house values.” He said that factor is expected to seriously affect the 2010-2011 budget when a variety of factors, including home sales, could bring an estimated $250,000 deficit. “We’ll know a little more this fall when we see the sales figures,” he said.
“The good news is we have a balanced budget, and the other good news is our employees did a good job at being good stewards of our funds and doing what we can with the money we’re allocated,” he said. City department heads were asked to reduce their operating expenses by two percent. “I will say that as the budget gets tighter, we don’t want you to think we have fat in the budget.” The tightening up has come through various means including a change in the amortization of the city’s pension system and city employees foregoing a pay raise next year. He said like other entities, the highest percentage of cost is for payroll.
“I don’t believe we are overly staffed at this point in time,” he said. “I don’t want anyone to think we’re just going to reduce services and layoff employees, but we just don’t know if that will happen,” said Welch. He said he could not guarantee that it wouldn’t happen, but his goal would be that two years from now, he’d like to see the city providing the same level of services to citizens at the same staffing levels. Also, he said it was important to continue to set aside funding for such things as capital improvements.
“We can’t just sit back and let our streets, roads and buildings fall apart. We still have to invest,” said Welch. “It’s probably going to be a couple of years where we’re pretty lean, but we don’t have a choice.” He said the city would try to stay on top of things through tactics such as having the Department of Public Works continue to fill cracks and try to do preventive maintenance on some streets.
The city also lost an estimated $40,000 in state shared revenue this budget year but has not received a final payment yet. Welch expects state shared revenue to be reduced by about $100,000 next year. He said state shared revenue funds have dropped by approximately $200,000 over a six year period. Other areas affecting revenues include a decline in participation through such city activities as Parks and Recreation events and Tecumseh Center for the Arts performances, as well as fewer fees coming into the Development Services Department with so little construction going on.
“This is just an overview, and it doesn’t look good,” said Welch. “But we’re going to come up with a plan to address it.”
During the regular meeting, the council members:
• Recognized NewSong Church members for citywide beautification efforts undertaken in May.
• Recognized Memorial Day Parade and Program volunteers and council member Gary Naugle, who has served as Parade Marshal for 10 years.
• Heard a report from the city manager, who noted that plans for the bottling company, Can Am, continue with a potential groundbreaking in August, and that Tecumseh Products and Consolidated Biscuit Company continue to work out environmental details. “We have two really dedicated parties and they want this to happen,” said Welch. “There are no big problems, it’s just taking a lot of time and effort to work through the environmental details.”
• Approved a special events permit for a Market Days and Pet Parade event to be held Friday, July 31 and Saturday, August 1 in downtown Tecumseh. The parade begins Saturday, at 10 a.m. at the First Presbyterian Church and ends at Adams Park.
• Authorized a traffic control order to alleviate a parking issue near the corner of Brown Street and Brook Street.
• Authorized a bid from Slusarski Excavating and Paving to abate asbestos located at the farm house on the Tecumseh Business and Technology Campus, not to exceed $5,000. City DPW crews are expected to do the demolition.
• Agreed to letters of understanding with the Police Officer’s Labor Council and the International Union of Operating Engineers, to forego a pay raise for the coming year to help with the city’s budget situation.