Expenses greater than revenues for Craig in 2016
December 15, 2015
In order to stay financially viable, the city of Craig will need to tap into its reserve funds once again in 2016.
The city is projecting to take about $500,000 out of general fund reserves by the end of 2015, and the city forecasts it will take roughly $1.48 million out of reserves in 2016.
In 2014, a total of $330,549 was used from reserves, and in 2013, the number was $1.23 million.
The general fund, which is used to fund the 14 departments that run city operations, is expected to see roughly $8.3 million in revenues in 2016 while spending about $9.78 million.
The city starts 2016 with approximately $4.17 million in general fund reserves, which will be tapped to account for the approximately $1.48 million difference. In 2015, the city started the year with $4.68 million in reserves.
On Nov. 24, Craig City Council adopted the budget setting forth projections for the city's revenues and expenses in 2016.
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According to the budget's introduction, the council took a conservative approach in adopting the 2016 budget as Craig continues to deal with slow economic recovery in the wake of the Great Recession.
"We've got to tighten up a little for this next year," said Mayor Ray Beck.
The combined expenses for all funds are $18,613,690, up from 2015's projected year-end expenses of $17.56 million but down from the $19 million initially adopted in the budget. Reserves for 2016 are anticipated at $8,019,065.
Councilor John Ponikvar said he was concerned about dipping into reserves and the city needs to find a way to increase revenue or cut more costs.
"We just can't maintain that," he said. "We need to run the city as a business."
From the time the council began working on the budget back in August to the final adoption in November, nearly $400,000 was cut in capital projects to but Ponikvar said he wanted to see a million cut.
To help close the gap, the city made the following cuts: $80,000 from the departments' operational budgets; $34,000 from code enforcement for a new vehicle; $170,000 from road and bridge; $52,680 from parks and recreation; $35,000 from Craig/Moffat Economic Development Partnership (though $20,000 was set aside in a separate economic development fund for the city); and $65,000 from a skate ramp construction project.
"Capital cuts were made, that we hate seeing, but until we can find a way to increase the revenue within the community, we're going to have to make cuts," said Councilor Derek Duran. "We can only cut so much capital year after year. It's going to start getting down to the nitty-gritty."
The city and county sales tax accounts for 58.9 percent of Craig's revenue. Bruce Nelson, the city's finance department director, said revenue collected from sales tax, which is 58.9 percent of Craig's total revenue, has declined since 2008 and will remain the same from 2015 to 2016 at around $4.8 million.
Beck said the big hit to Craig's income comes from a 61 percent decrease in mineral lease revenue and an expected 23 percent decline in severance tax revenue, aboit a half million dollar loss combined.
As the year progress, Nelson will provide monthly finance updates to the council and the budget will be adapted as necessary.
"The budget is nothing but a projected guess based on past performance," Beck said, explaining it can be amended based on changes in revenue or expenses.
Jim Ferree, city manager, said the council strives to retain 25 percent of projected expenditures in reserve for every fund and the 2016 budget meets that goal with 27.45 percent in anticipated reserves for the general fund.
"That's minimum," Ferree said, explaining the 25 percent figure is set to account for three months of operating costs.
Going into 2016, the City Council's goal is finding a way to increase revenue to prevent additional cuts in the 2017 budget or taking more money out of reserve.
"It's very important that we keep an eye on our expenditures compared to our revenues and try to keep within our means and not get into our reserves," said Councilor Kent Nielson.