Fort Smith officials working on budget cuts

Fort Smith’s leaders are facing some tough decisions as lower tax revenues have led to nearly a half-million dollar budget shortfall, and they’re asking city employees for input.

KFSM 5 News, a content partner with The City Wire, obtained a copy of a budget survey that officials confirmed would be going out to city employees starting next week. It says the city is facing a $412,117 shortfall in the general fund due to the bad economy and poor sales tax revenues, and lists four different options to cut costs out of the budget. City workers are asked to rank them in order of most preferred to least preferred, and there is a space at the bottom to include other expense-cutting suggestions.

The choices include letting the city make up the shortfall by reducing the amount paid for employee benefits, requiring employees to take unpaid days off, possibly once a month, taking a pay cut, or by eliminating positions through layoffs.

"We will also be holding meetings with city employees to ask them if they can think of any places to cut costs, and help us avoid cutting any personnel," Deputy City Administrator Ray Gosack said in the KFSM report.

The pay cuts listed in the survey would equal 0.5% for employees that earn between $30,000 and $40,000; 0.75% for employees that earn between $40,000 and $60,000; and a 1% reduction for those that make more than $60,000.

Gosack said the city has been aware of this possible shortfall for some time, and department heads have already made some changes to cut costs.

Once the meetings are over with and the surveys collected, the city will come up with a plan to deal with the shortfall and present it to the board of directors for approval.

The loss of revenue to the city of Fort Smith general fund for the first four months of 2010 is $254,053 compared to the same period of 2009.

The city’s portion of the one-cent countywide sales tax was $1.308 million in the April report, down 3% from the same period in 2009. For the first four months of 2010, the city has collected $5.049 million on its portion of the countywide tax, down 4.79% from the same period in 2009. The countywide year-over-year rate of decline has dropped from 5.6% for the first two months of 2010 and 5.39% for the first three months of 2010.

Gosack said in late May that city officials were relieved to see improving trends in tax collections but are still firming up plans for proposed budget cuts based on what the general fund looks like in June.

“The good news is that the rate of decline is slowing, but the bad news is that it’s still less than what we’ve budgeted,” Gosack said after the April report was released. “It’s not enough (improvements) yet to help us avoid that (budget cuts).”