Fort Smith board to consider $1.53 million in budget cuts

Specific cuts proposed for the 2010 Fort Smith city budget total more than $1.53 million, according to details released Friday afternoon.

A July 15 memo from City Finance Director Kara Bushkuhl details three budget-cutting areas the city board is to consider during their July 20 regular meeting.

The biggest part of the budget cut involves a $1,176,470 reduction in payments into the city’s health and wellness fund. The fund has a more than $6 million surplus and can afford the temporary reduction, said Deputy City Administrator Ray Gosack.

He stressed that the wellness fund move is not a transfer of money out of the fund but a temporary reduction in the amount of money going into the fund.

“We can safely lower that (wellness fund) by $1.1 million and still have a healthy surplus,” Gosack said.

A hiring freeze on 10 vacant positions will pull another $353,610 from the budget, and no longer providing meals at board study sessions will save an estimated $1,700 a year.

The city faces a $412,117 shortfall in the general budget. The shortfall is likely to grow between the June-December period. Bushkuhl has said the declines are the result of a 9.4% year-to-date dip in county sales tax revenue and an 18.7% dip in franchise fees. The sales tax collection declines reflect a recession-induced slowdown in consumer spending, and the franchise fee dip results from lower rates and usage of natural gas and electricity.

Gosack said an actuarial study of the wellness fund is underway to better determine the required rate of contributions into the fund. He said the surplus is a result of city employees making better health care decisions. The study will ensure the fund is adequately funded without creating a surplus that may unnecessarily drain funds out of the general operating fund.

Also, Gosack said city administrators are interested in pursing cost-cutting ideas recently suggested by city employees. An idea he thinks has merit is investigating the possibility of excessive overtime.

“We’re not out of the woods yet with this economic crisis,” Gosack noted, adding that some thought budget reductions made in February would solve the problem. “We will monitor this (tax revenue) monthly. If we wait until the last quarter of the year … it may be too late to make adjustments.”

City Director Cole Goodman, who will be out of town and unable to attend the July 20 meeting, sent a note to the other board members encouraging them to support the budget cut proposal.

Goodman noted in his e-mail: “At this past Tuesday’s study session my recommendation was that we do not fund any open positions at this time saving approximately $369000. That we take as much as $1 million from health fund surplus. Of course if the whole $1M is not needed we wouldn’t remove the whole $1M, only the amount needed. I hope you will pass this.”

Goodman, who did not seek re-election and will not be on the board in 2011, ended his note with an advisory: “Also, the budgeting process begins in about 3 weeks. The total budget should not exceed where we are with the shortfall. I foresee we may have worse tax income next year.”