Friday, October 1, 2010
The Jackson City Council approved a final revision to the city's budget containing a total of $5.3 million in budget reductions, after the administration overestimated some department expenditures and increased insurance costs.
"We reduced our ... overall budget by making accounting adjustments," Jackson Mayor Harvey Johnson Jr. said.
Yesterday marked the third and final revision to the city budget before the Oct. 1 deadline for municipal revisions. The $5.3 million budget reduction includes two earlier revisions that included cuts to city services by eliminating employee positions.
Department of Administration Director Lee Unger told the council yesterday that the city discovered savings after purchasing a Jackson Fire Department Fire Alert System, which came in $832, 000 under estimates.
"We basically went to the bank to buy a car, but we didn't need all the money, and the bank kept their money and we avoided that debt," Johnson said making a metaphor for the savings.
The city also over estimated Department of Parks and Recreation's budget. Unger said the department's final budget is $6,401,478--a $350,692 difference from its original projected budget of $6,752,170. Savings in the department came from eliminating positions and capital equipment costs.
The city's Water and Sewer Department managed to break even, even though revenues in that department dropped by $4,607,947. Reduced water sales and meter installation fees accounted for much of that loss. The city managed to cut $4.6 million in expenses for the department, however, including $1.5 million from the closing down of unfilled staff positions.
Johnson said that even though the city managed to balance the water sewer division's budget, the drop in revenue made clear the need for an annual $50 increase in water and sewer fees for the average city customer.
"(The rate increase) will keep us from having to dip into our reserve fund to cover shortfalls in the coming year," Johnson said. He added that not imposing the rate increase could cost the city "about $3 million per year."
The Employee's Benefit Fund was a drain on the budget, with insurance claims rising higher than initially budgeted. The city had projected a cost of $11,526,429, but discovered costs were actually about $398,000 higher, at $11,924,781. The city managed to offset that increase with $104,000 in insurance reimbursements, but still had to tap the general fund for $294, 352 to cover the remaining difference.
The council voted 6-to-1 in favor of the revision, with Ward 1 Councilman Jeff Weill opposing the budget and Ward 3 Councilman Kenneth Stokes not present. Weill has opposed the basic structure of the budget since Johnson first unveiled the budget in August. The councilman said he stands against the administration's push to restructure its debt, arguing that it adds more debt to the city in the long run.
The city will see an annual influx of about $5 million from the restructuring plan over the next four budget cycles, but will begin paying about $5 million a year when the payments becomes due in 2015.