Of the $6.2 million the city now has in cash, not a penny remains uncommitted.
That was the message – along with a general warning about how the bleak economic climate is impacting the city’s plans – that elbowed its way to the forefront of Wednesday’s special City Council meeting.
When the talk was over, few were smiling.
Still, despite all the worry, one exchange between Councilman Chris Snow and Finance Director Elray Konkel not only provided insight into leaders’ shared plight, it also offered a rare zinger amid a steady stream of stoicism.
“We have some serious belt tightening to do,” Snow said. “But the sky isn’t falling, is it?”
After a moment’s hesitation came Konkel’s forecast.
“It’s pretty dark,” he said, prompting an eruption of laughter and applause in Council Chambers.
When the commotion had subsided, councilors were back where they started, with too much to do and too little money with which to do it.
If current trends continue, city revenues by the end of the year could be down as much as $2 million from what was projected in the budget, Konkel told councilors.
He outlined several specific areas where the city’s tax revenue is lagging. Sales taxes – in particular, tax associated with construction – as well as real estate excise tax revenue are well off what the finance staff expected, at least through the first quarter of the year.
Some of the gloom will be offset by unanticipated staff vacancies and ongoing budget adjustments, such as the recent cuts made to the planned Winslow Way Streetscape; Konkel said those numbers are fluid and subject to constant tweaks. Contingency money also could be frozen for safety.
The city still hasn’t closed the books on 2007, but last year’s final numbers are expected to come in soon, within $300,000 of what the city targeted.
Though their opinions on city finances were nuanced, councilors agreed on the bottom line: with no easy answers on the horizon, the city has no choice but to reel in its spending.
“Things seem dark when you don’t have control of your circumstances,” said Councilwoman Hilary Franz. “But we do have control of our spending. Given the financial forecast you’ve just given us, we need to start looking at our spending right now.”
Konkel said the city typically carries between $6 million and $10 million in cash, depending on the time of year.
By that measure, things are normal, he said. The problem now continues to be the sharper than expected falloff in revenue.
“We’ve been very spoiled,” Konkel said of the past few years. “These are very serious numbers with very serious declines in a very short period of time. In a four or five month period, numbers are taking half-million dollar turns.”
Some relief may be coming.
The city is expecting as much as $100,000 later this year from the Streamlined Sales Tax, drawn from Internet and catalogue sales.
That could offset some of the island’s lost sales tax revenue, which in general is much lower than other areas in the state due to a lack of large-box vendors.
Another $400,000 could come from a local motor vehicle excise tax. Cities can choose to charge residents as much as $20 per registered vehicle, without a public vote.
Some councilors expressed interest in the MVET as a way to fix numerous road problems around the island.
Councilwoman Debbie Vancil said the city needs to be careful about any plan that would place a greater burden on islanders who, like the city, are already being forced to stretch.
“This is a difficult period for individuals and families as well,” she said. “We’re talking about increasing their costs so that we can reduce ours – we need to make sure we recognize the impact to individuals.”
Councilman Kjell Stoknes said he still isn’t getting the type of financial information he needs to make decisions on big projects such as the Streetscape.
“What I’m getting here are words,” he said. “Unfortunately words aren’t going to show me the answers I’m looking for.”
The majority of Wednesday’s meeting was devoted to money matters, though many in the audience had come expecting to see a continuation of last week’s Streetscape discussion.
Planners have told the council they need to approve a contract soon to continue design on the project, or risk delaying it by a year.
For now, work is set to begin in spring 2009, but with financial troubles and continuing disagreement over the scope of the work, the start date remains in some jeopardy.
Multiple cuts have trimmed the project’s budget from $20.6 million to perhaps as little as $11.3 million, though some above ground work could be added back in at additional expense.
Councilors are pleased with the recent changes, but at the beginning of Wednesday’s meeting agreed they needed a clearer picture of the city’s overall financial picture before they could again delve into the contentious topic.
When the Streetscape finally came up, Project Manager Chris Wierzbicki said there was little left to say.
“I’ve probably carried this project about as far as it can go,” he said. “Everything is on the table. Now it’s up to the council to do whatever it’s going to do.”
A decision could come at the April 9 council meeting.
No public comment was taken at Wednesday’s meeting, though 11 Winslow Way business owners did hand deliver a letter to the council reiterating their desire to start the project on time.
“The repair of the failing infrastructure beneath Winslow Way is undeniably necessary,” the letter said. “A well thought out plan is now in place. The integrity of the cost of the project has been confirmed by the value engineering study. The streetscape project will never get easier or less expensive to accomplish. Instead, it seems to us that a great deal of momentum, cooperation, focus and trust will be lost if we delay.”
Councilwoman Kim Brackett offered a counterpoint to the argument that the city should move forward now on the project to avoid spending more later, due to increased construction costs.
“I’d like to see some numbers to support that,” she said. “I’ve never seen it pencil out like that in my personal life.”
