Hudson -- Council approved the city's 2014 budget 6-1 Dec. 18, but not without some criticism from the one member who voted against it.
Council members spent two special meetings discussing the five-year budget forecast and two more special meetings discussing the annual budget, which is based on the five-year budget forecast. Both are normally approved before the new year.
The 2014 city budget is $75.7 million, including $20.8 million in the general fund.
According to Finance Director Jeff Knoblauch's budget figures, $19 million is budgeted for revenue in the general fund and $20.8 million in expenses, and there is a carryover from 2013 of $10.87 million. So, although projected yearly expenses in the general fund exceed revenue by $1.8 million the overall ending balance in the general fund will be estimated at $9 million due to the carryover.
Council member William Wooldredge, who voted against the budget Dec. 18, said a few weeks earlier that he would not vote to approve the budget with a negative run balance of $2 million in the general fund; the budget showed the fund's revenue of $18.8 million and expenses of $20.9 million at that time.
Knoblauch said he made adjustments to reduce the $2 million difference to $1.8 million. The reduction was due to $52,609 less for part-time dispatch, $21,00 reduction in the phase II Atlas marketing plan and a higher actual income tax revenue in 2013, which is used to calculate 2014 revenue, he said.
Wooldredge said he wanted the budget to more accurately reflect the project costs included in the five-year budget forecast.
He said the city will see significant permanent loss of revenue in 2014 with the decrease in government funding by half and elimination of the estate tax for a total of $1.6 million. These numbers were reflected in the 2014 budget, but Wooldredge wanted to know how the lost funds would be replaced.
"There's a structural imbalance between revenue and expenses that needs to be addressed," Wooldredge said. "Cut expenses or increase revenue or a combination."
Council member Dan Williams said some of the general fund expenses in 2014 are not permanent, such as $700,000 for the demolition loan payment of the Youth Development Center on Hines Hill Road and a $573,538 payment on a $5 million dollar loan for road improvements.
Without those two items, the projected expenses would be closer to projected revenue, Williams added.
"This budget has non-structural items and is very capital intense," said Council member David Basil. "In serving our citizens, we need to address capital items."
The 2014 projected general fund ending balance of $9 million to $20.8 million expenses is above Council's target of a 40 percent ratio for the general fund, he said.
"We need to use these funds for the services of the community," Basil said.
Council President Hal DeSaussure urged Council to vote for the budget, and they could talk about declining funds going forward.
"If Council votes no, we're not going forward," DeSaussure said. "What kind of message are we sending to the city?"
DeSaussure said he was comfortable with a 43.4 percent balance ratio.
"Other cities carry over 25 percent, and I don't think we want to carry over 50 percent year after year," he said. "Our budget is what we told staff to hit at 40 percent."
Five-year budget forecast
The five-year budget forecast was unanimously approved 7-0 after some discussion.
Council members said in 2014 they would like to discuss the five-year budget forecast earlier in the year instead of waiting until the end of the year.
Council member Dennis Hanink said he was concerned about the city's process for the forecast. Normally, Council reviews the five-year budget forecast at the end of the year and bases the annual budget on it. Council members said they would like to review the forecast earlier in the year and have more project costs included for the three- to five-year forecasts.
"It doesn't appropriately predict where the city will be in the next five years," Hanink said.
"It looks very reassuring," Wooldredge said. "The fourth and fifth years look rosy. We don't have capital expenditures or place holders for those years so the numbers are misleading. We need actual numbers."
Knoblauch calculates an increase in income taxes with $14.1 million in 2014 and $15.35 million in 2018. He kept property tax income steady at $2.65 million in 2014 and $2.68 million the next four years.
Knoblauch projected future personnel cost to increase from $7.5 million in 2014 to $8.1 million in 2018.
The number of full-time employees, currently at 149, is expected to remain the same.
The five-year budget forecast includes street maintenance and other annual expenses as well as special projects such as the YDC demolition.
DeSaussure said some capital improvements were not shown in the five-year plan, but he supported both budgets.
"It has been my experience our outlining plan has a weaker outlook than rosier," DeSaussure said. "When we look at the actual year, it's above 40 percent. We have historically done better in an actual year than what was predicted so it's a conservative budget."
Basil said moving the five-year budget forecast to an earlier date next year will give Council more time to look at it as a separate document from the one-year budget plan presented at the end of the year.
Hanink said he wanted a better job of total planning not just a different time of year.
"We need to focus on departments and understand the cost drivers," Hanink said. "We need to understand what is driving the expenses of the city."
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Facebook: Laura Freeman, Record Publishing