City facing over $800K-plus budget deficit
Published 11:24 am Sunday, July 28, 2019
By Beth Alston
Mayor asks department heads to make cuts
AMERICUS — The Americus mayor and city council met in a called session Thursday to discuss the mid-year budget analysis. Council members Lou Chase and Daryl Dowdell were both absent.
City finance director, Diadra Powell, told the mayor and council that last August when they approved salary increases for the city employees, they knew there would be a $480,000 shortfall. Since then, it has been ascertained that the gap will actually be $898,200. Powell said she had met with City Manager Charles Coney as well as Fire Chief Roger Bivins and Police Chief Mark Scott and had identified some of the problems. In the police department, she said, the chief had put out for bid several vehicles he thought would be delivered last year, but they weren’t actually delivered until this year. Another problem, with the fire and police departments, has been based on projected funding of total number of personnel. Once the salaries were increased, the fluctuations in vacancies in the public safety departments leveled off and both are fully staffed.
Powell had some recommendations for dealing with the shortfall, as follows.
- Meetings with city manager and department heads to reduce the budget gap.
- Freeze all hiring until December.
- Stop all unbudgeted spending.
She said each department should closely monitor their budgets. With public safety being 54 percent of the General Fund, or half of the $13 million city budget, Powell said budget reductions are called for.
Powell also said that overtime, built-in overtime, social security and retirement and gasoline expenses have also contributed to the gap.
Mayor Barry Blount reminded council that in August 2018, when they approved the salary and compensation study recommendations, the millage rate was 10.32. When they approved the salary adjustments for September through December 2018, that represented another .82 mill. It will now take a rate of 14.09 mills to make the budget. “We went into this with our eyes wide open,” he said. “We were told of a shortfall in the fire department because of salaries, now it’s doubled. Why haven’t we known this until now?”
Powell said the shortfall is not wholly related to the salaries, and “it’s not a whole lot of money” for overtime and built-in overtime, social security and retirement. “We almost broke even with what we expect the fire department to be at the end of the year,” she said.
Blount said he was only asking questions. Powell said she had asked department heads “five or six times” to make sure their expenditures were being coded correctly. Council member Charles Christmas commented that in December, when they thought they had a $480,000 shortfall, they should have started working with department heads then. “What has been done?” he asked.
“This is quite insightful for finance,” city manager, Charles Coney, said. “In leadership meetings, we’ve asked them [department heads] to work with the finance director about what’s needed or what can wait.” Coney said that although each department has its own budget, “it’s actually one big department and we have to manage it wisely.”
In answer to Christmas’ question, Powell said that human resources has agreed not to hire and to cut expenses, and that the fire department has taken actions, but she hasn’t reached out to any others.
Coney said that looking back at the Public Works budget, he noticed charges that were miscoded, and fixed it. “But moving dollars is different from cutting dollars,” Christmas said. “The way we spend two cents is the same as when we spend $2 million. It requires meticulous management.”
The mayor said they have to set the millage rate in September, which leaves very little time to get everything done. He asked that the city manager, finance director, and department heads get together and make proposed budget cuts to reduce a 14.09 millage rate down to a lower number.
“We did the salary increase in August,” Blount said. “Now is the time to reckon. How do we maintain this without an [tax] increase? That’s our challenge. It costs to run a city. Everybody wants the services but don’t want to pay for it.”
The mayor mentioned that the police department is about to go through an expensive certification process, which businesses considering locating here always look at. Police Chief Scott said the process does cost money but will ultimately save money because it will bring insurance costs down. “In order to have growth and a sustainable community, you must have the money to do it,” the mayor said.
The meeting has started with a report from Heidi Pendergrass, a CPA with Mauldin & Jenkins, who told them there was an exception found in auditing the budget for the 2018 calendar year. That evoked much discussion as well. The problem concerns the “rate convenant” which basically guarantees a bond holder that the rates are sufficient to ensure making debt service payments. Diadra Powell explained that much of this problem relates back to department heads failing to code correctly and some expenses are being paid out of the wrong funds. The mayor asked her why she was unaware of the rate covenant problem. “There is no way technically to know until all expenses are known,” she said. Council member Juanita Wilson suggested there should be a way department heads will know how to code from the right accounts so this doesn’t happen again. City manager Coney commented that they are beginning to capture account numbers when the resolutions are signed. “This is good record-keeping,” he said.
Blount’s concern was that if this occurs every year, and the city has to borrow money, that they won’t get a good interest rate.
Both Powell and Pendergrass stressed that “government accounting is a different animal” and has rules that other business entities are not bound to.
The mayor and city council expect an updated report at the August meeting.