“We're predicting for the next couple years we're going to need to hunker down,” Engen told the Missoula City Council Budget Committee of the Whole.
The mayor announced the reversal in Council Chambers and also relayed his plan for getting the account on track. He said he asked department heads to identify $1.7 million in savings for the current fiscal year to address a decline in income and put money in the bank.
“I think the snakes in this basket are going to get bigger and more venomous as time goes by,” Haines said.
At the meeting, Engen explained the reasons the fund shrunk from $2.1 million - it never actually met its goal - to $1.2 million. Basically, the rainy day hit Missoula hard with a number of unexpected bills and an unanticipated drop in tax collection.
For starters, more senior employees than expected retired in 2008, and the city paid more than $280,000 in retirement costs. Also, the city continued to pay fire hydrant fees while it waited for a final order from the Public Service Commission on whether it was liable for those costs. The PSC ruled the city shouldn't be charged, but the bill that accrued in the meantime came in at $261,000. Also, the spike in fuel, energy and utility costs ate up $82,000. The current budget accounts for those higher costs.
Low revenues also contributed to smaller reserves. Tax collections came in short by an “unprecedented” $443,000, mostly from commercial payers, Engen said. Also, fines and citations came in $325,000 short of budget.
While the financial picture looked far from rosy, the mayor pointed to some “silver linings.” Missoula's credit rating is the highest a city can receive from Standard & Poors, he said. He also said Missoula is in much better shape than some other cities. In California, for instance, the city of Oakland is closing offices one day a month to tackle a $42 million deficit.
Missoula's problem, on the other hand, is that it doesn't have as much cash in its savings as planned. But the city will be socking away money and is building its reserves back up.
“That's a much better position to be in,” Engen said.
Council members received the news without too much apparent consternation. Ward 4 Councilman Jon Wilkins said he appreciated the frank discussion, but he also worried about the human part of the budget crunch. He said he was disappointed the city had hired a building inspector from Livingston and then laid off the employee, who would likely find it difficult to find another job in Missoula.
“I feel like we kinda hung this person out to dry,” Wilkins said.
That position is tied to Building Department fees, and Engen said the city never would have made the hire had the decrease been anticipated. He said he loses sleep over many things, and he loses the most over the human piece Wilkins mentioned.
“That's really why we're going through this program now,” Engen said.
Ward 2 Councilwoman Pam Walzer said she appreciated the proactive approach. She thanked the mayor for responding early to projected revenue shortfalls instead of waiting to see how the 2009 budget progressed.
“We passed a budget. You could have just gone on with that,” Walzer said.
But Ward 2 Councilman John Hendrickson aired concerns. He said he didn't support across-the-board reductions because he didn't want to see cuts at offices such as the Fire Department. He also said some of this quarter's revenue drops weren't a surprise and asked why the mayor hadn't accounted for less money in the proposed 2009 budget.
“What changed in the last five weeks?” Hendrickson asked.
Engen said a number of factors contributed. For one, a flurry of budget activity all comes to a head at the same time. The city ends up preparing for an audit, closing out one budget year and planning for another fiscal year all at the same time. On top of that, this year the Department of Revenue certified a different amount of income for Missoula than expected. Engen, however, said careful quarterly reviews should help the city monitor the budget in the future.
Several council members asked the mayor to provide details of how department heads had chosen to cut their budgets, and Engen said he would do so.
Reporter Keila Szpaller can be reached at 523-5262 or at keila.szpaller@missoulian.com.
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Erik Maurer wrote on Oct 30, 2008 7:06 AM: