LoginCreate an account

     
 
Home News-Telegram News No job cuts expected for city staff; pragmatic planning has Sulphur Springs’ bottom line in good shape

No job cuts expected for city staff; pragmatic planning has Sulphur Springs’ bottom line in good shape

E-mail Print PDF
Like the vast majority of North Texas cities, Sulphur Springs saw its sales tax check for this month fall, putting a slight dent in the year’s revenue projections. But unlike so many other Metroplex-area municipalities, city officials here aren’t sweating over job cuts to help make ends meet.

As city leaders prepare to wrap up the current fiscal year and beginning planning the budget for the next, they can be thankful for a conservative financial planning strategy that allows the time to react to fluctuations in the economy.

“It takes you years to build up the right personnel and provide the efficiencies you want in terms of government,” said Peter Karstens, director of finance for the city of Sulphur Springs. “You really don’t want to have to, in a budget crunch, almost overreact in getting rid some of those positions.”

Other cities across North Texas aren’t responding as well to the economic downturn. In Plano, for example, sales tax collections — an important source of revenue in a town with so much retail activity — fell almost 40 percent in May, and the city has already made several rounds of budget cuts. Garland is facing a $7 million budget shortfall. Sales tax declines in Grand Prairie have also forced job cuts.

One fact working in Sulphur Springs’ favor is a strong general fund balance, or the amount of money left in reserve after the year’s bills have been paid. Financial auditors annually praise the city for the percentage of its revenue held in reserve. That, coupled with a year’s worth of growth in sales tax revenue, has generated a healthy bottom line in the accounting ledger.

“We have  pretty good fund balance in the general fund, and sales tax has been up for the past 12 months,” Karstens noted.

And even though this month’s sales tax rebate is down, that’s more a reflection of how strong retail sales were a year ago than anything else.

“I kind of expected it, because last year at this time it went up significantly,” Karstens said. “You get to that second year of those types of increases and it’s hard to kind of keep it steady.”

Whether that’s a trend to watch out for, however, or simply a one-time anomaly remains to be seen.

“It will take two or three months to kind of see what that means,” Karstens said. “We’re going to be cautious about that.”

Meanwhile, the our property tax appraisals within the city limits are also up 1 percent, which was also expected.

“That means our budget is pretty much flat as far as revenue, which means the challenge then is to respond on the expenditures side, to keep it pretty well static,” Karstens explained.

One question mark facing the financial director is the issue of a cost of living adjustment for municipal employees. The CPI, or Consumer Price Index, is used to calculate inflation’s impact on income. That number is actually down from 2008.

“Last year we had very high gas prices, and that’s down,” Karstens explained. “Even though you go to the market and you notice some things are higher, overall, the cost of living is lower.”

Two other aspects of financial planning also seem to work in the city’s favor every year: Basing revenues on past history, not optimistic projections, and a willingness to shake up the status quo.

“What we try to do is anticipate these sorts of things by budgeting our revenue based on the year before,” Karstens noted. “For state and city governments that don’t do that and try to squeeze every bit of revenue out of projections, you get the first bit of bad news and the tent starts folding up.”

Conversely, Sulphur Springs is always “about 8 to 12 months out in terms of what we try to do in terms of sensing bad news and pulling back.”

For example, the city could use another building inspector, but adding an additional person to the staff has been delayed until it makes fiscal sense.

“We’re just going to keep punting that forward until we see whether we have the budget room to do that,” Karstens said. “What we don’t want to do is get into a position where we’re having to eliminate personnel positions that are defined as very needed. And we think that we’ve done a pretty good job of anticipating that.

Keeping a lid on the number of city staff personnel and increasing the efficiency levels has also paid off handsomely, Karstens said.

“We have the same number of people that we had 10 years ago,” he said. “I think if you look at some of the cities having budget problems, you won’t see that. Even though they’ve grown population-wise, a lot of those cities have found needs to grow faster than the population. We’ve tried over the last 10 years to pretty much stay at the same level, but increase efficiencies of what we get done. We don’t want to be in a  position to compromise those efficiencies by having to react financially. At the same time, we want to make sure that we take care of these valuable employees in a time that’s economically stressful.”

But, as always, city officials are also eyeing the future pragmatically and realistically.

“Having said that, we just don’t know what the market’s going to look like in six months or a year,” Karstens said. “What we’re talking about now is preparing some contingencies in case this recession doesn’t recover or even gets worse.”

 

Search...

WebSite

mySSnews Login



User Menu