Stagnating sales tax revenue meant the city's budget didn't grow from 2001 to 2002 and it means that it won't grow in 2003, City Manager Jim Ferree said Monday.
"There are some people predicting the economy will turn in 2003, but we have to budget based on what's happened in the past, not what's being predicted," Ferree said. "We prefer to budget conservatively and if we end up having more revenue, we're ahead."
City staff members have been working on the 2003 budget for the past two months and plan to submit a preliminary version to the Craig City Council today.
It calls for total general fund expenditures of $7.3 million. Revenues are estimated at $6.4 million.
Some reserve funds, plus money from this year that was budgeted but never spent, will make up the difference between what the city takes in and what it plans to spend in 2003, Ferree said.
The city usually ends up spending less money than it budgets each year, the city manager said.
Those figures are tentative. The budget will change just about every day until the council approves the final version, Ferree said.
The council will meet for an all-day budget workshop Oct. 3 in the boardroom of the School Administration Building. After the council's changes have been worked into the budget, it will be presented for the first step in the formal adoption process beginning Oct. 22. On Nov. 12, it will receive its first reading and final approval is scheduled for Nov. 26.
"The public can comment at any time," Ferree said.
Revenues have remained flat across the board, particularly in sales tax, which makes up 55 to 60 percent of the city's general fund income.
"I'm anticipating, because we want to be conservative, that we'll just hold our own," said Bruce Johnson, city finance manager. "Right now, everything seems flat."
The city is still calculating water, wastewater and solid waste revenues, but, unlike sales tax, those funds are expected to increase. That money will be used for improvements for those departments, because their budgets are separate from the general fund budget.
In the general fund which includes the police department, parks and recreation, administration, road and bridge and public works capital improvements will take the hit, Ferree said.
Department heads have been not been limited on the requests they make for capital projects park upgrades, new vehicles, new equipment or road work.
"They (department heads) know to keep them reasonable," Ferree said.
Some of the requests will be rejected, but having them gives him an idea of what to expect down the road in future expenditures, Ferree said.
"Then we'll prioritize and figure what we can afford," he said.
Ferree said department heads are working to decrease their operational budgets as much as possible.
"It makes it difficult when you don't have any growth, but we've been able to do it the last couple of years," he said.
Police Chief Walt Vanatta said growing a department without an increase in revenue is difficult, especially considering the rising costs of operating.
"Operationally, that's a problem because the cost of operating keeps going up, but our revenues don't. But, it's better than some Front Range communities where they have to cut their budgets 5 or 6 percent," he said. "It's not bad once you put it in perspective."
Last year, the council gave all employees a 3 percent cost-of-living increase despite stagnating revenues. That money was taken from money set aside for capital improvements and money budgeted from the previous year that was not spent.
The council will decide during its workshop what, if any, pay increase employees will get.
"We just may not be able to do a lot of the improvements we would like to do or do them as quickly as we'd like to do them," Ferree said.
Even with a no-growth budget, the city will maintain a 25 percent operational reserve and budget for a worst-case scenario for employee health benefits.
"There will be no change in employee benefits," Ferree said, "but we have no idea whether there will be an increase in benefit costs until February or March."
He said a cost increase for employee benefits is expected.
City Road and Bridge Department Supervisor Randy Call said creating a budget with no revenue increase isn't difficult.
"We just have to refine some line items and just cut back a little bit in each so you don't notice," he said.
Copies of the budget will be available in Johnson's office at City Hall.