The Holloway administration this morning presented a FY 2013 budget that proposes at least six unpaid days for city employees, slashes discretionary spending for social service agencies and other groups by 50 percent, and exhausts the city’s rainy day fund to cover a $2 million gap between revenue and expenses.
“This is the toughest budget in 20 years,” Director of Administration David Staehling told council members, who will review the proposed budget over the next several weeks with a goal of having an approved spending plan in place by mid-September. The new fiscal year begins Oct. 1.
The proposed budget has total spending of $57.3 million – 72 percent of which is for employee salaries and benefits – and revenue of $53.5 million, which is primarily from gaming, sales and property taxes. The budget is prefaced on beginning the year with $5 million and plans to end the fiscal year $2 million. Staehling also suggested the city in March consider six more unpaid days, called furlough days, to cover the last half of the fiscal year, if finances have not improved.
“Our revenue is flat,” Staehling said. “Taxes are just where we thought they would be with the way the economy is. The problem is that we must cut expenditures. Revenue is not the problem, it’s expenditures. And the bulk of our expenditures are personnel related. We no longer have the huge reserve to draw from to balance the budget. It’s gone, and if we don’t take action now, the situation will be worse next year.
“We’re looking at the same thing as every other city on the Mississippi Gulf Coast. We can get through this, but we need to take action now.”
Staehling also said the city may also have to suspend longevity pay, which rewards long-serving employees and would cost the city about $800,000 this year.
“We’ve cut $3 million from all city departments, we’ve removed about two dozen vacant positions from the budget, and we’ll continue a hiring freeze, but we’ve cut all we can cut. The bulk of the budget is for salaries and fringe benefits. At some point, you must address that area.”
The next budget meeting will be Tuesday at 9 a.m. All budget meetings are in City Hall and are open to the public.