Craig City finance director updates council
February 25, 2011
Craig Finance Director Bruce Nelson's job is always a guessing game, he said.
Whether it is balancing projected revenues against a variety of influencing factors like the economy and declining sales tax, or working with the needs of all the city's departments to create a balanced budget, Nelson has a lot on his mind, he said.
Nelson gave a presentation Tuesday to the Craig City Council outlining the city's finances from last year. He said despite being shaken by the bad economy, the city is still in good financial shape.
"Revenue projections (being) conservative is the big key," he said. "It is easy to end up with more money than less because that affects the next year, too. When it comes to budgeting, by state law we have to have a balanced budget. So therefore, they can't spend more than what they get.
"But, our departments are pretty good at that — they only spend what they need. So, we usually always end up with some money left over."
In 2010, the city saw a boost in total sales tax figures in both city sales tax and sales tax funds allocated from the county, called countywide sales tax.
However, the 9.42 percent increase in countywide sales tax and 12.33 percent increase in city sales tax came from an unexpected source, Nelson said.
A state audit revealed the state was holding a chunk of money the city was supposed to receive. That money totaled $837,000 and was collected over a six-year period.
However, without the one-time boost of audit money, actual city and countywide sales tax numbers show a different picture, Nelson said.
In 2010, the city received $1.17 million in countywide sales tax, which was 7.12 percent, or $90,220.98 less than budgeted. Last year's countywide sales tax collection was 9.64 percent, or $125,505.32 less than 2009's collections.
The city collected $3.18 million in city sales tax this year, which was 6.20 percent, or $210,456.99 less than budgeted. This year's city sales tax collection was 8.05 percent, or $278,800.83 less than 2009's collections.
Since 2008, city sales tax collections are down about 14 percent. Countywide sales tax collections are also down about 16 percent since 2008, which Nelson said was a "peak year" for the city.
Sales tax is the largest source of income for the city's general fund, Nelson said. It provides 53 percent of the funding for the police department, road and bridge department, and parks and recreation department, among others.
Last year, the general fund received 9 percent more revenue than budgeted and city departments only spent 85 percent of the money budgeted. The city received $9.7 million in general fund revenues and only spent $9.1 million from the general fund.
Of the major general fund departments, the police department spent 98 percent of their budget, the road and bridge department spent 83 percent, and the parks and recreation department spent 93 percent.
About 60 percent of the capital outlay fund was used in 2010. But, Nelson said some of those projects have been rolled over into 2011's budget.
For the 2011 budget, Nelson budgeted spending $9.85 million from the general fund and receiving $8.24 million in revenues, meaning the city could have to pull about $1.6 million from reserve funds.
After 2011, the city will have about $3.4 million in general fund reserves and $6.79 million in total reserves.
For the 2011 budget, the city is planning $16.5 million in expenditures, which is down from 2010's budget of $18.6 million. The city actually landed on about $16 million in actual expenditures in 2010, but some of those projects were carried over into 2011's budget.
In total, Nelson said the city plans to spend about $400,000 more in 2011 than it did in 2010.
However, Nelson has one "big if" in the budget. Nelson's concern is the approximately $700,000 in mineral lease and severance tax revenue budgeted for 2011. Nelson said the state might cut those funds, which would have been allocated to the general fund.
Craig Mayor Don Jones said Nelson does a "great job."
"Especially explaining everything to us every month," Jones said. "It is pretty much black and white."
Jones agreed the city is in a good financial position.
"It would be nice to have more money, naturally," he said. "But, I think we have done well budgeting in the last few years and yeah, we are going to watch our pennies. Hopefully the sales tax picks back up, but yeah I think … for the times right now, we are very fortunate to be where we are at."