During the City Council meeting held today, Tyler City Manager Mark McDaniel updated the Council on actions underway to compensate for the shortfalls the City is experiencing due to lower than projected sales and property tax revenue.
“To date, we are seeing a $1.5 million shortfall in the sales tax revenue as compared to what we projected,” said McDaniel. “At this rate the annual revenue shortfall could easily reach $2 million less than budgeted.”
During the 2009/2010 budget process the City budgeted for flat sales tax revenue. However, in the first several months of the fiscal year, the revenues have continued to decline further than anticipated.
“We are definitely seeing the decline level off,” added McDaniel. “However, it will take a very rapid recovery to offset the losses we have experienced in the first four months of the fiscal year. To compensate, we have taken several steps to ensure the City ends the year under budget.”
For only the second time in Tyler’s history, City officials are preparing tri-annual budget forecasts to prepare for potential tough economic times. The three-year forecasts will allow City leaders to prioritize spending and make necessary cuts in a strategic manner should poor economic conditions linger.
The three-year forecast projects potential increases in health premiums, retirement contributions, operating expenses, capital obligations and other costs of managing City services.
Tyler ended the 2008/2009 fiscal year under budget, notwithstanding collecting nearly $2 million less revenue than anticipated.
“Having no general obligation debt certainly helped the City stay within budget without raising taxes or significantly impacting services to citizens,” commented Mayor Barbara Bass. “This means that 100 percent of the sales and property tax collected can go toward providing services rather than paying debt service.”
In addition to the preparation of the three-year forecasts, other actions that the City is taking:
· A hiring freeze has been put in affect and all vacancies are being reviewed by the City manager;
· Restrictions on external training have been enacted;
· The annual budget process is starting four months early to allow time for closer scrutiny of spending requests;
· Existing contracts for services are being closely scrutinized for potential savings;
· Temporary services are being cut where possible;
· Minor organizational consolidations and restructuring are being assessed; and,
· Opportunities for outsourcing additional City services on a competitive basis are being sought.
“During today’s meeting, the City Council awarded two contracts to Signature Contracting Services and Integrity Tree Care for grounds maintenance services,” explained McDaniel. “By outsourcing these services, it is anticipated that the City will save approximately $162,000 annually.”