Sales tax revenue has, for the past four months, been higher than what city officials anticipated, but they're not banking on that boon lasting throughout next year.
That's made crafting the 2006 budget difficult, City Manager Jim Ferree said.
"This budget was not easy," he said.
Revenues are expected to be up in several areas -- a high assessed value in Moffat County could mean a 12.49 percent increase in the city's property taxes, and proceeds from mineral leases are expected to be 36 percent higher in 2006 than budgeted in 2005. The city also is expected to benefit from increased energy-related activities. Companies that extract natural resources pay a severance tax, some of which is kept at the state level and portions of which are returned to cities and counties.
The city budgeted to get $180,000 in 2005 and is expected to collect $296,250. It was budgeted to receive $$220,000 this year.
It's an educated guess, city Finance Director Bruce Nelson said, because no one can determine how much activity there will be in any given year, which is why officials budget conservatively.
A 2.25 percent sales tax accounts for more than one-third of the city's expected general fund revenues, but isn't expected to rise much next year. The budget calls for a 4 percent increase.
The city expects to ask the Department of Local Affairs for a $1 million grant, which would be used to offset the $7 million cost of upgrading the water plant -- a project that will begin in 2006 and increase the plant's daily treatment capacity from six million gallons to 9.5 million gallons.
If awarded, the grant will go into the water fund, which is separate from the general fund. The general fund pays for the police services, parks and recreation, administration and the road and bridge department.
The city also will apply for grants to upgrade the finance department's software and to overlay the Lincoln Street tennis courts.
If those grants are awarded, the city will have more than it budgeted, but until then, officials are expecting income from grants to be down $536,000.
The 2006 budget calls for revenues to be slightly higher than 2005's -- a 1.01 percent increase.
The city is budgeted to spend $7,796,655, 2 percent less than last year, but cuts into the $1,181,982 carryforward -- money that was budgeted this year, but not spent.
Expected revenue won't change, but city officials are scrambling to redistribute expenditures. During Friday's daylong budget workshop, Craig City Councilors agreed to add 2 1/2 positions. Although the city has the reserves to cover the addition, Ferree said that doesn't leave much room for employee wage increases. He and other key staff members will continue to evaluate the budget to work in additional personnel while preserving dollars for a cost of living wage increase for employees.
The budget won't be finalized until November or December.