Poor economic conditions and the prospect of losing funding sources put the city of Millwood in the position of a potential budget shortfall for a second consecutive year.
As a forum to discuss the challenges, the Millwood City Council held a special budget workshop Nov. 23. “We’ve been going through the budget trying to cut out everything we can,” City Planner Tom Richardson said. “We’re getting down to ‘can we get by with a smaller Dumpster?’ ”
City Treasurer Debbie Matkin presented the preliminary budget to the council and a small audience. Even though the proposed budget cuts are nonessential items, the city finds itself with deficits in the water and general funds.
“We have to have a balanced budget and it has to take in consideration the future,” Matkin said. “We aren’t saving any money for the future.”
To make up a general fund deficit of more than $14,000, Matkin proposed a 25 percent reduction in code enforcement salary and benefits and imposing a 2 percent tax on Avista for each natural gas customer.
“The reason this is being proposed is not because we want to increase revenues. It’s because we’re trying to make up for revenues that we’ve lost,” Richardson said. He said the tax is expected to make up for $12,600 of $60,000 loss in natural gas revenues. He said the city has the ability to tax up to 6 percent. Anything more requires a vote by the citizens.
Richardson said if the council approves code enforcement reductions, the position would become “more complaint-driven,” instead of the officer patrolling the city looking for concerns. The reduction saves $6,000.
Mayor Dan Mork said the city is evaluating employee benefits as an option to reduce costs.
“Right now it’s in the budget we will have the employees pay a percentage of the top plan,” Matkin said. “That is very subject to change.”
Matkin also noted the city has an $18,413 deficit in the water fund.
In 2003, Millwood issued bonds to finance the water and sewer systems completed in the early 1990s, reaching maturity in 2015. The state requires the city to hold significant cash reserves in each fund until the bond debt is paid. Matkin said the reserves were depleted by inflation over the last few years.
“Another problem is those bonds are water and sewer bonds,” Matkin said. “In the 17 years we’ve been paying for them, water has never made a payment. Sewer has. We may look into a situation where we raise water and split payments and everybody starts paying their fair share.”
The lack of required reserves, along with increasing costs of water and sewer equipment and maintenance, have led to the city evaluate current utility rates. The rates are currently being reviewed by Andy O’Neill from Rural Community Assistance Corporation.
“When we see the rate evaluation come back,” Matkin said, “I think it’s going to be a big, big number for water.”
Matkin suggested transferring $61,000 from bond reserves to the bond fund for payment due in 2012. “We won’t have that option next year,” Matkin said.
For 2012, the budget estimates an excess of $35,000 for the street fund but no projects are in the budget. However, Mork said the city has planned traffic calming measures on South Riverway and Bridgeport Avenue.
Matkin also reported budget measures being proposed at the state level could impact the city. The most significant is the projected loss of revenue stemming from the possible elimination of the state’s liquor excise tax revenue sharing beginning July 1.
The city plans to hold a third public budget hearing at the next regular City Council meeting before final adoption.
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