City Council struggles to balance 2011-2012 budget despite many cuts in spending

The City of Monticello continues to try to tighten its belt related to spending from the general fund, but even with several changes and cuts in the current year, they find themselves with a $75,000 shortfall in their tentative budget for 2011-2012. 
The general fund includes all subsidized city departments including streets, police, recreation, the golf course, parks, and the swimming pool. With a total proposed budget of $1.625 million in the general fund and projected revenue of only $1.55 million, the council continues to seek ways to balance the upcoming budget by the June deadline.
A public hearing on approval of the tentative budget was held during last week’s council meeting with several members of the community present to express opinions.  
City Manager Kelly Pehrson opened the hearing by stating his feeling that the city is moving in right direction. He pointed out that in the current year, there was the sale of a building for $90,000 to balance the general fund which the city will not have to do this year.
Also in the current year, the city had to borrow $79,000 from the sanitation enterprise fund in order to balance the general fund. Pehrson stated that with the current numbers, they will have to borrow funds from an enterprise fund in order to balance the budget but again stated his feeling that “we are moving in the right direction”. 
Councilman Scott Frost pointed out that the enterprise funds have borrowed from the general fund on occasion as well, specifically mentioning during the drought when approximately $250,000 was borrowed.
Enterprise funds include money from the water, sewer and sanitation departments. These funds are separate from the general fund and are from departments that have to make money.  Money in the enterprise funds is earmarked to be spent on projects and equipment replacements needed in that department.
Pehrson stated it is not wise to borrow from the funds, and the city is trying to get away from the practice which has gone on for many years. 
Councilman Scott Shakespeare pointed out the city has done a good job trying to balance the budget in several areas including the reduction of wages by $75,000 in the past few years and reducing interest payments they are making on loans.
“I think we are on the right track,” said Shakespeare, “but we are not quite where we want to be yet. Hopefully in another year or two we will be on the positive side.”
City Manager Pehrson went over taxes collected in 2008, with sales tax at $362,000 and $103,000 in resort community tax. In 2009 sales taxes dropped to $286,000 and the city no longer was eligible to receive the resort community tax.
In 2010 sales tax again dropped, to $266,000 collected, and in 2011 only $250,000 in sales tax is estimated to be collected.
Pehrson pointed out the current situation has created a $215,000 difference in tax revenue, $110,000 in sales tax alone that has been lost by the city in the past three years.  
Local business owner Scott Pehrson questioned when the sales tax revenues continued to drop was there reduced spending to make up for it or “did the ship just continue to sail forward thinking those revenues would be made up somehow.”  
He said the current situation was created because no one determined the city needed to stop spending money. He cited several of the large projects in the city, including the swimming pool, lights on Center Street, and mountain water collection that are nice to have but also have loan payments due every year at a time when the city can’t afford them.
Scott Pehrson said these examples point to a “lack of fiscal responsibility. Now all the sudden we are in crisis management.”  
He asked if the city budget for the current year is higher or lower than it was in 2008. Mayor Doug Allen stated that it is significantly lower with positions being cut, city employees not receiving raises in two to three years, and trying to minimize increases in benefits costs through changing plans.
Allen said changes in taxes made by the State Legislature have continued to cause suffering for the city.
“I feel like we have done extraordinarily well at trying to get it down, but it just keeps on coming,” stated Allen. “All we can do is keep on reducing expenses and hope the economy picks back up.” 
Pehrson expressed appreciation for the drop in taxes and the economy driven problems the city is facing but questioned the “menu of new projects the City of Monticello is undertaking,” all of which have a cost associated with them.
Self employed resident Jayne Frost questioned the need for a city benefits package for employees. She stated that self employed persons either pay for their own insurances or go without.
“A lot of us are going without and yet you are still hanging onto a benefit package for your city employees,” said Frost.
She also stated that self employed people can’t just go tax someone to help them out, and yet they still find a way to make money or else their business goes under. She expressed her opinion that the city should be looking at running their operations in the same way.
Councilman Brad Randall said the city employees have been cut greatly in their benefit package over the past five years. City Manager Pehrson stated that the employees are the biggest asset of the city, and if the benefits are cut, the turnover will be often and continual at a great cost to the city.  
Scott Pehrson agreed employees are an asset and stated he could see the city has done a great deal to cut their employee operation as much as possible. Pehrson stated he is not looking to strip more pay or benefits from the employees but thinks the city needs to identify the things they absolutely have to do, do those things very well and let go of the unnecessary items.
He questioned how citizens will feel about a potential increase in their utility rates, “with no hope of ever going back down. I don’t think they are going to be happy about that.”
City Manager Kelly Pehrson stated the city is not immune to added costs to do business and something has to happen to cover those added costs.
Scott Pehrson did not question the need for the enterprise funds to be able to pay for themselves and the need to raise costs to do so but felt there needed to be a philosophical change in the way the city spends money, so they are not borrowing money from the enterprise funds to the point there is no money, just a long list of IOU’s.
Resident Tom Wigginton stated he has attended the budget work meeting in each of the past two years. “This time I came away feeling a little better about it,” stated Wigginton, as opposed to a feeling of frustration in the previous year. He felt the city was moving in the right direction but agreed they should not continue to take out loans for things they want if there is no money to make the payments.
The council does not have to adopt the final budget until June 22. Councilman Brad Randall had concerns with holding the public hearing for the increase in utility rates on the same day as the adoption of the final budget, as the outcome of the hearing will affect the budget.
At this time there have been no income numbers put into the tentative budget from a utility rate increase or from a tax increase. Randall suggested it would be better if there was time between the decisions in order to consider any necessary budget changes after the public hearing.
City Manager Pehrson suggested the council should declare their intention to hold a truth in taxation hearing, even if nothing happens with it, so they can extend the time to adopt the final budget until August.
The council unanimously adopted the tentative budget as presented and will approve the final budget on August 9. According to State law the tentative budget can be approved without being in balance.
They also requested an item be put on the next agenda to declare their intention to go through the truth in taxation process. The date of the public hearing for truth in taxation will be set at the next council meeting.
City Manager Pehrson reported to the council that they had received good news from the county transportation district, which receives funds from mineral leasing and oil and gas money. The district gives the city $200,000 annually for street projects, but will be giving them an additional $400,000 in the coming year due to receiving more funds than they anticipated. Money received from the transportation district is money that does not have to be repaid by the city.
 In other business, the council heard a petition for a municipal disconnect, or a deannexation from the city limits of Monticello. The petitioners are R.D. Carroll and Robert Morris for approximately 480 on the west side of Monticello.  
The petition listed five reasons for seeking the disconnect including a desire to drill wells for water and use septic systems, the use of the majority of land for grazing and hunting, the control of roads, ability to limit access by the public, and the design of Monticello College being a more rural setting requiring less restrictive and non-residential regulations.
Dr. Shanon Brooks read a prepared statement to the council on the issue. He gave a brief history of plans that began in 2006 when the leadership of George Wythe University conceived the idea of moving their campus to Monticello to develop a university that would include 10 colleges, 1200 students, 50-60 buildings, hundreds of jobs and millions of dollars in revenue. 
“That dream is dead,” stated Brooks, who told the council that in a 2010 vote of the George Wythe board, the plan for Monticello was reversed, despite all of his best efforts to keep it moving forward.  
Brooks talked about a new dream being born in Monticello College, without the grand plans that were in place for George Wythe. Monticello College plans for 50 on-campus students annually. Brooks stated there are no plans for more than 50 students, large buildings, or dormitories.
“Monticello College is not George Wythe University. It is a very different plan with a very different group of people,” stated Brooks. He reviewed several areas of the Monticello city code which outline requirements for streets, curb and gutter, subdivision requirements, sewer and water. Brooks told the council these requirements would create a hardship that would prevent them from moving forward and kill the future of the school. 
Of the land in question, 50 acres are owned by Monticello College with the remainder being privately owned by other land owners. Brooks stated that with many of the acres being in greenbelt and Monticello College being untaxable as a non-profit organization, the acreage does not provide a large amount of taxes to the city.
Brooks estimates by 2013 the college will provide four jobs, and plans for eight employees by 2016. He estimated $36,000 spent locally in student meals and $48,000 for student housing annually, numbers he expects to double by 2018.
Several residents spoke in favor of Brooks and the plan for Monticello College, stating their support for the municipal disconnection petition.
Now that the public hearing has been held, the council has 45 days in which to make a decision on the issue. During that time Planning and Zoning Commission will discuss the issue further and then forward a recommendation to the city council.  
The council can accept, reject or modify the recommendation. The meeting of the Planning and Zoning Commission is the first Tuesday of each month, with their next meeting being held on June 7.  
The council was told there has been interest in the old airport property and there is a need at this time for an asking price. City Manager Kelly Pehrson stated the cost of an appraisal on the old airport property would be $2,000, or the City staff could determine a price based on the infrastructure on the property. The council agreed to allow the city staff to evaluate the property and present it to the interested party with the understanding that offers are contingent upon city council approval.
Mayor Doug Allen presented the council with the decision of the Community Impact Board regarding the City’s application for funding of the extension of the north water line. Allen stated they were seeking 100 percent grant funding and received 100 precent loan for their application.
In previous discussions, the council had stated that if they did not receive grant funding, they would abandon the plan to extend the north water line. Councilman Walter Bird made a motion to discontinue efforts to obtain funding from the CIB for the extension of the north water line. The council voted unanimously in favor.
The City Council recognized George Rice Jr. as the Employee of the Quarter.  City Manager Kelly Pehrson praised George for his hard work and upbeat attitude.  Pehrson stated that Rice is a huge asset to the city’s Public Works Department.  
Victor Nebeker was unanimously appointed to the Airport Committee and a report was received from Anna Clark on the Kite Festival that was sponsored by the Monticello Chamber of Commerce. Clark stated there were many merchants who donated prizes and there were 25 participants flying kites in the first year of what the Chamber envisions to be an annual event.