Hudson -- City Council has begun reviewing Hudson's annual five-year budget plan in July, instead of waiting until the end of the year as it's done in the past.
"Historically we did the budget in the fall before the one-year budget," said Council President Hal DeSaussure. "Council determined it might be better to review midyear and uncouple it from the one-year plan."
The five-year forecast provides information for the one-year budget and how to plan for the future. Council members wanted more detail in the five-year plan for more accurate forecasts. The earlier review will give city staff time to rework the plan before the work on the annual budget begins at the end of the year, if needed, DeSaussure said.
The five-year plan will have more place holders for future projects, and because the process is starting earlier, the discussion on the five-year plan can be done during regular workshops instead of adding special meetings to ensure approving the plan before its deadline at the end of the year, DeSaussure said.
In addition, an ad hoc committee created in February reviewed the budget process to assist Council in balancing revenues and expenditures for long-term growth and sustainability, according to Finance Director Jeff Knoblauch. Recommendations would help address the loss of estate tax revenue and reduction in local government funding to the city.
Council member William Wooldredge, who serves on the finance ad-hoc subcommittee with fellow Council members Dan Williams and Dennis Hanink, proposed July 22 a change to the report to keep operating costs at the 2014 amount for the next five years -- excluding interest, debt, capital improvements and RITA (the city income tax collection agency). It would save $740,000, Wooldredge said.
The saved money would go toward unfunded projects for roads, water and storm water, which range from $25,000 to $8 million each and total $16.675 million.
The city should search for more projects like the brine well proposal, Hanink said. Public Works Director Frank Comeriato in June proposed a brine well to provide salt brine for roads during the winter to reduce the amount of salt the city purchases each year.
The city could use the money saved from operating costs to finance the project, Hanink said.
"A brine well would cost approximately $400,000 with an annual cost savings of approximately $80,000," Knoblauch said. "The break even point is approximately five years."
Another concern was the less than anticipated increase in income taxes, which are coming in at a 1.6 percent increase rather than the anticipated 2 percent increase, or about $260,000 less, Knoblauch said.
"The most recent run rate is negative $2.1 million (revenue minus expenses) in the general fund with a projected carryover (balance divided by expenses) of 43.8 percent," he said. The balance carried over to the next year of $8 million is a result of the negative run rate decreasing the previous year carryover of $10 million.
Last year Council approved a negative run rate of $2 million on the 2014 general fund budget and asked if the city should spend more funds since the 40 percent, or $8 million carryover, is earning low interest and loses purchase power if costs increase, Hanink said.
"We want to be good stewards [of taxpayer's money] but can we be too conservative?" Hanink asked.
Councilman Keith Smith believes the answer is yes.
"There are two sides to a balance sheet," Smith said. "Keep in mind the 40 percent loses purchasing power. We save money in the out years by buying now. We tend to focus on revenue but need to utilize the liability side."
Currently the budget has a carryover of $8 million of its $20 million expenditures, or 40 percent. If the percentage was lowered to 35 percent, the carryover would be $7 million and provide $1 million for projects.
Funding has come from other sources within the budget. Knoblauch said a transfer of $523,156 was made to the Debt Service Fund because all of the purchase orders have been paid from the Milford/Route 91 Connnector Fund, a project nearly 10 years old.
Council members asked if there were any other similar funds, and Knoblauch said the Youth Development Center fund could have $185,000 left to transfer to the Debt Service Fund by the end of the year after the final bills for demolition of the 14 buildings have been paid.
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