Fort Smith Board approves 2015 budget with close vote – maybe

The vote to approve a version of the fiscal year 2015 budget for the city of Fort Smith is over one hurdle and could have two more to go depending on an attorney's opinion following a 4-3 vote Tuesday night (Dec. 2).

The vote, which saw City Directors Keith Lau, Mike Lorenz and Vice Mayor Kevin Settle go against the majority of the Board, was set for two additional readings at meetings at later dates before attorney Colby Roe of Daily and Woods stood to note that the ordinance in question was a "non-permanent ordinance," meaning it is only in effect for one year and therefore does not require three readings if not passed by a supermajority of five.

"That's something I would like to discuss with Mr. Canfield (City Attorney Jerry Canfield)," said Roe, who was filling in for Canfield as legal counsel to the Board on Tuesday. "My understanding is that this is not a permanent ordinance, but that's something I can check with and get back with you on.”

Roe said he would research the issue and provide a legal opinion to Gosack tomorrow, adding in response to a question from Mayor Sandy Sanders that reading the ordinance three times would not impact its legality should the readings ultimately prove to be unnecessary.

Before the confusion resulting from the vote, Finance Director Kara Bushkuhl presented to the Board a budget that included step and merit increases, as well as a cost of living adjustment (COLA) of 1% for all city employees. The total cost for all raises was pegged at $1.425 million for the fiscal year.

To pay for the raises, the budget includes raising fees at Oak Cemetery, which will raise an additional $25,000 per year, as well as amending alcohol permits and fees in the city, adding a net of $89,000 in revenue for FY2015.

Budget cuts were the primary way the Board paid for the COLA and merit and step raises. A 1% reduction in operating costs in all programs funded by the general fund saved $468,818 in the FY2015 budget.

Eliminating staff positions also was included in the budget cuts, with one police records clerk, two patrol officers, two parks positions (a lifeguard and a seasonal laborer), one transit dispatcher and one cross connection technician in the utilities department being axed from the budget.

The staffing levels at the city will go from an original appropriations request of 943.83 full-time employees to 936.83 FTE at a savings of $309,790.

The cuts did not go far enough, with Lau vocally opposing the budget before voting no, noting that the city was still spending $2.14 million more than expected revenues in FY2015. He further added that the city's reserve fund of 7.5% in the FY2015 budget is below stated minimums in the Board's own policy mandates. Unspent funds, reserve and otherwise, are typically rolled into the next year's budget to be spent, which Bushkuhl has previously explained as the reason for the differences in anticipated revenues versus expenditures.

Another reason Lau said he would vote against the budget is because it does not address the upcoming insolvency of the police and fire pension contribution fund, which the city's own projections show going broke in 2019.

"I said in our study session when we first started talking about the budgets that I would not vote for a budget that didn't include putting some money toward the LOPFI retirement fund and I'll take that a step further and say as it pertains to the general fund – our other funds are sound – but as it pertains to the general fund, I don't believe this is a fiscally responsible budget that's on the table to be voted on tonight.”

City Director Pam Weber, who was joined in voting for the budget by City Directors André Good, George Catsavis and Philip Merry, said she would have liked to have seen many things in the budget, but had compromised to get a budget to a vote Tuesday.

"We've spent a lot of hours on this budget and I am not 100% happy with the budget. I am never 100% happy with the budget. A lot of things that were personally things that I wanted to see done were cut from the budget. Some things that we put as priorities at our retreat were cut, one of the first things that we cut. … I felt like the last night of the budget that we were compromising on issues so that we could come to an agreement.”

Regarding LOPFI, Sanders said action on police and fire pensions would be deferred until a later time. A LOPFI board meeting is scheduled in Little Rock next week, which he said would provide better clarity on which direction the city should go regarding funding options for the pension contribution fund.