Hudson -- Some Council members expressed concern over the general fund budget projected for 2014 at the Hudson Council workshop Dec. 5.
The estimated general fund 2014 budget shows $18.8 million in revenue and $20.9 million in expenses, for a negative $2 million balance for the year. But $10.7 million is expected to be carried over from 2013, creating an ending balance of $8.6 million.
The budget would have a negative run rate but retain a 41.3 percent ratio of the ending balance compared to the city's expenses. The city's goal is to maintain at least a 40 percent ratio balance ccording to Jody Roberts, communications manager.
"It is not unusual to have a negative run rate when our general fund balance is well above our 40 percent target," said Roberts. "We are strategically spending down that additional amount over the 40 percent annual carryover in the general fund by investing it in capital improvements such as more road and infrastructure projects. Also in 2014 and 2015 there is the one-time cost of demolition of YDC that will not be incurred in future years."
Council member William Wooldredge asked the city to look at reducing the negative run rate.
"I couldn't vote for this level of a negative run rate," Wooldredge said.
The budget is scheduled for a vote Dec. 18 and could pass with a majority.
Council President Hal DeSaussure said last year's run rate was a negative $1.65 million, and Council approved the budget.
Wooldredge said he was concerned about the reduction in the estate tax and state funding and said he'd be comfortable with a negative run rate of $1 million.
The estate tax was eliminated by the state and is budgeted at $313,986 for 2014, down from $800,000 in 2013. It is expected to be zero in 2015. The local government fund will drop from $550,000 in 2013 to $425,000 in 2014.
Council member David Basil said he expected the negative run rate would only affect 2014 but not in the long-term.
"Nobody likes a negative run rate, especially a big one," said Basil. "There are one-time issues in the next couple of years. I don't want to give someone the idea that the sky is falling in."
The city has been prudent in the five-year plan and although in 2014-15 there are significant expenses, those are temporary, Basil said. Some of the expenses include $700,000 for the demolition loan payment of the Youth Development Center buildings on Hines Hill Road and a $573,538 payment on a $5 million, 10-year loan for road reconstruction.
Last year the city budgeted conservatively and the income tax increased, DeSaussure said.
"We have growth," he said. "We're doing better. We projected a lot worse than what it really was, and $2 million is a conservative estimate on how we're going to do."
Mayor William Currin said the city fared well during the downturn, and other communities relied more on the estate tax and local government fund than Hudson.
DeSaussure said the city's benchmark for the general fund is 40 percent. The projected revenue in 2013 is $19.7 million with expenses of $20.1 million, but the carryover makes the final balance $10.7 million. It will be 53.1 percent at the end of 2013 and will still be above 40 percent at the end of 2014.
"Do we want to be in a position to hit 50 percent and neglect services?" DeSaussure said. "This is not a bleak picture."
Wooldredge said his concern was long term.
"I'd rather address it this year than in future years," Wooldredge said.
Interim City Manager Scott Schroyer said Council could discuss the future budgets in early 2014.
"I would be concerned if expenses went up, but I don't see that," Schroyer said.
Wooldredge said the key was to keep the number of employees the same.
DeSaussure said personnel cost was 68 percent of the budget, and Council would look at the number of people in each department in the future and determine what number is needed to operate and provide services.
Council members also asked for department charts to show more clearly where personnel was shared between departments in the budget report.
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