Like many other businesses around the country, the city of Springfield is seeing its revenue drop.
The question now is how it will cut costs or increase revenue to offset that drop.
Danny Hardin, a certified public accountant, presented the city council with an audit of the fiscal year that ended June 30, 2010.
Hardin advised the council that the net change in fund balance of the general fund should be considered net income for the city.
“This year it is $42,000,” he said. “A year ago, it was almost $180,000.”
General fund revenues were $2,223,696 last fiscal year while general fund expenditures were $2,181,266.
The general fund is outlined in the audit as the city’s primary operating fund.
In order to offset that drop in net income, Hardin listed nine points to consider to increase revenue or cut costs.
Among those nine points were “evaluate essential and non-essential services; evaluate staffing levels and fringe benefits; evaluate utilities and consider energy audits; review phone expenses and gasoline usage; and consider the sale of surplus property.”
The list also implored the council to “review potential annexation while considering service provisions required, review tourism expenditures and expand per KRS and local ordinance, increase property taxes as allowed by law, consider increase of other revenue sources and refrain from all nonessential purchases.”
“Like all facets of business, the city budget reflects a downturn in the economy,” Hardin wrote in the report. “Other industrial, retail, service and professional layoffs have had a trickle down effect on city revenues.”
The report added, “Maintaining the same level of city service has become and will continue to be more challenging during the foreseeable economic times.”
On a positive note, the audit report added that “the foresight of the city officials, in the adopting of the tourism tax in May of 2008, has had a positive impact on the city’s financial future. This revenue stream has generated income to allow for the continuation of festivals and entertainment and tourism-related activities.”
He added that Kentucky law allows one half of tourism collections to be transferred to the general fund.
“Tourism tax revenues have exceeded expectations for the first two years of collections,” Hardin wrote. “The local theater group, which is now controlled by a 501c3 formed board, has also reaped the benefits of the tourism funding.”
He added that the theater had nearly 5,000 patrons last year, “which has created tremendous commerce for local restaurants, motels and other businesses.”
Hardin said the tourism commission is “working to accumulate funding so that a long-term and perhaps regional impact may be made to benefit the community and its businesses.”
Hardin also wrote that the city was working on two particular projects to increase occupational tax revenues.
“The city is currently working on an annexation plan that considers annexing additional property into the city limits,” Hardin wrote. “This property, some of which is developed, would aid in increasing the city population, which is imperative for the recruitment of not only industry, but also retail and other establishments.”
He added that “developing a plan that includes land adjacent to the new bypass is imperative for proper growth” and that “consideration is also under way for land proposed to build the new high school.”
The other project Hardin pointed out would be the location of the new library downtown.
“This potential would serve the community’s elderly, children and the LMI populations for pedestrian and other purposes,” he wrote. “The location of this facility, along with the high school, would be imperative for occupational tax revenues.”
Hardin said the other three funds (municipal road aid, capital projects and other government funds) “flip flop from year to year.”
The good news, Hardin said, was that the new water system added around $2.5 million worth of assets for the city.
Hardin also said the city received almost $2.1 million in grant revenue last fiscal year, including $513,000 in loans that were forgiven under the new stimulus plan, and almost $900,000 in money from the state.
Hardin said there was nothing found in the audit that required extra scrutiny.
Mayor Dr. John Cecconi asked how much savings the new water pump station would bring.
“There is a very large savings,” Hardin said. “The larger pipe is letting the water flow through with less resistance. It seemed like it was a $40,000 difference in about five months, having the new pumps and the new water line.”
City administrator Laurie Smith said the list of special considerations has not been discussed yet, but will be when the recently appointed budgetary committee meets.
The committee, appointed by the mayor, consists of Paul Borders, Lisa Haydon and Debbie Wakefield.
“We’ll have to consider everything possible and see how we can get our finances in order,” she said. “I think we can. I think we are being proactive.”
Smith added that the financial health of the city was not critical.
“Do I think we’re in trouble?” Smith said. “I do, but I don’t think it’s critical. I think it’s good to evaluate what we are doing and see if we can make changes.”