City may use reserve funds to balance 2009 budget

By Jim Faile

Published: May 16, 2008

Hartsville City Council on Tuesday gave preliminary approval to a proposed city budget for the coming fiscal year of more than $11.5 million that will raise property taxes by $84,000 and that will use about $469,000 from reserve funds to keep it in balance.

Council gave first-reading approval to four ordinances making up the budget package.

“This comes after many, many cuts,” City Manager Jim Pennington told council members in presenting the budget for first reading.

In its current form, the budget package includes a general fund budget of $7,325,969, a utility fund budget of $2,502,425, a solid waste fund budget of $1,005,672 and a hospitality tax fund budget of $695,100.

The new general fund budget will raise about $84,000 in new revenue through a property tax increase, which equates to 3.41 mills, still within the limit imposed by the state under the 2.9 percent Consumer Price Index (CPI) increase approved by the State Budget and Control Board.

In his annual budget message to council, Pennington said CPI revenue cap by the state and other restrictions on home rule are hampering the ability of municipalities around the state to raise revenues to meet local needs.

The tax increase would raise the total millage rate for property owners in the city from its current 117.72 mills to 121.13 mills and would add about $13.70 to the annual tax bill on a home valued at $100,000.

But that still left the general fund budget with projected expenditures exceeding revenues by $469,494. Pennington said that money will come from the operational reserve. “This is where we are, and we’re still $469,000 short, but we can manage that,” he said.

Operational budget requests from department heads exceeded projected revenues by $946,607, Pennington said in his budget message. City staff eliminated more than $477,000 in requests to get the deficit to the $469,000 level, Pennington said.

“The department heads have done an excellent job containing costs during the current budget year, as they have in the past, and I am confident they can do so this coming fiscal year,” Pennington said.

Councilman Johnny Andrews commended the staff for its work on the budget. “We were in a bigger hole,” he said.

But Andrews said he would like to see some possible budget scenarios presented in which the reliance on reserve funds would be reduced or eliminated.
Pennington said he could provide those figures, but he cautioned that any additional cuts would likely have to come in the area of personnel, which he said makes up the biggest part of the general fund budget.

And personnel, he said, is an area the city can ill afford to cut further. “You added a half a million dollars in operational costs with the opening of Byerly Park,” he said.
“If you cut more at this point, you’re going to have to identify specific programs and services, and that means personnel. There’s nothing left,” he said.
“This is happening all across the country. We are not by ourselves,” Pennington said.

The solid waste fund budget relies on a transfer of $164,000 from the general fund to balance it, Pennington said. He said he plans to recommend a $2 rate increase from the current $15 to $17 a month to eliminate a $64,672 gap resulting from capital equipment needs and spiraling fuel costs in that budget.

Pennington said the utilities budget is “precariously balanced,” with the current rate structure not producing the rate of return the city needs to continue to maintain and upgrade the water and sewer systems. Although not included in the budget, the city is planning to initiate a rate study, he said. Council raised utility fees in fiscal 2003, but water and sewer tap fees have not risen since 2001. 

The budget ordinances must receive one more favorable vote from council to pass.

The city’s new fiscal year begins on July 1.