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City tax revenues continue to slide

City officials are gearing up for nine meetings of budget-intensive discussion.

City Financial Director Chip Corder provided a “big picture” look at the second quarter financial status report for the 2010 General Fund and Capital Improvement Program budgets at a City Council meeting last Tuesday.

“We’re looking at a revenue shortfall of about $2 million. That’s $300,000 greater than what I had previously forecast back in the May/June timeframe,” Corder said. “Thankfully, that shortfall is eclipsed by expenditures being under what’s budgeted, and significantly so.”

General Fund

The city’s total revenues reached just 46.7 percent of the budget versus the 50 percent that City Finance Director Chip Corder had budgeted for by June 30 of this year.

The shortfall is due to less-than-expected revenue from sales tax, utility taxes and interest, Corder said.

There is a silver lining to this dark budget cloud. Although 2010 revenues fell short of expectations for the first half of the year, they’re still slightly more compared to the same time last year, to the tune of $17,000, or 0.2 percent.

Total expenditures have only reached 43.8 percent of the budget due to cost-cutting measures, employee compensation reductions, savings from vacant positions and the efforts of various departments to save money, Corder said.

“This is what has been concerning to me,” Corder said. “From a revenue perspective, last year wasn’t the bottom of the recession. This year is the bottom of the recession for us.”

Corder highlighted a number of revenue shortfalls for the first quarter of 2010 in comparison to the same time last year, including investment interest (down $41,000 or 74 percent), court fines (down $30,000 or about 14 percent), utility taxes (down $88,000 or almost 5 percent), and sales tax (down $64,000 or just under 5 percent).

On a positive note, property tax revenue increased by $101,000, or 2 percent, and licenses, permits and zoning fees — a lead indicator for a recovering economy — rose by 19.5 percent, or $150,000 over the same period last year.

In terms of positive development activity, Corder noted the redevelopment of the old Safeway site, located across from Aljoya on 76th Avenue S.E., and the Shorewood condominiums. Both projects have paid their permit fees and are scheduled to begin in 2011.

Corder said he plans to balance the 2010 budget, partially with the use of “rainy day funds.” Earlier this year, the Council authorized the use of 25 percent of the fund, equivalent to $586,000; however, Corder plans to use only $479,000.

“Expenditure savings of one kind or another” will also help balance the 2011-2012 budget, Corder said. “We can cover this deficit this year.”

Capital Investments

On the other hand, the Capital Improvement Program (CIP) budget is basically on-target, he said.

Real estate excise tax, also known as REET, is up by $201,000 (38.7 percent); home sales are up from 89 last year to 150 this year (68.5 percent); and average sales prices increased by 12.2 percent from $880,000 to $987,000.

Corder plans to balance the CIP budget through $229,000 in project savings, $131,000 in CIP staffing reductions and $224,000 in project reductions, he said.

“We’ve got it covered,” he said.

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