Fort Smith may pull from wellness fund to fix funding gap

story by Aric Mitchell
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Sometimes the best solutions are the ones right in front of you.

That was the consensus at Tuesday’s (July 13) study session of the Fort Smith Board of Directors during which the board discussed budget cutting measures needed in order to help the city overcome a shortfall.

The decline in the general fund resulted in a recent move by City Administrator Dennis Kelly to seek budget cutting ideas from employees.

On June 23, Kelly issued a memo to all city employees informing them of the $412,117 shortfall in the general budget. The memo set out a series of meetings between June 28 and July 8 to seek their input on how to cut the budget. Budget-cutting choices outlined in Kelly’s memo include reducing employee benefits, requiring employees to take unpaid days off, taking a pay cut, or eliminating positions through layoffs.

However, 239 of the 519 surveys returned by city employees rejected the options Kelly presented, according to a Friday (July 9) report by Richard Jones, director of the city’s human resources department.

Now it turns out, thanks to a suggestion by City Director Cole Goodman, that the solution may be much simpler than initially thought. Goodman’s concern was not just for the current shortfall, but for what remains of 2010. City Finance Director Kara Bushkuhl confirmed his fear that the shortage could grow to as much as $1.2 million by year’s end.

Goodman’s suggestion: Save $369,000 on hiring freezes for vacant positions and take the rest out of the health and wellness fund surplus, which stands at more than $5 million.

“Quit talking about cutting people’s salaries, and cut back to a reasonable amount of funding for each department. That way our employees don’t have to worry about losing their jobs,” explained Goodman. “We are committed to protecting our employees and the services to our citizens. We have a way of taking care of this problem that doesn’t cut any positions, and doesn’t cut any services. Let’s do it.”

Bushkuhl provided two options. One would push $3.772 million from the wellness balance fund to the city’s four operating funds, and the other would push $3.091 million to the funds. The breakdowns of the two options:
• Option 1 — $3.772 million
General Fund: $2.301 million
Street Maintenance Fund: $233,894
Water and Sewer Operating Fund: $852,582
Sanitation Operating Fund: $384,794

• Option 2 — $3.091 million
General Fund: $1.885 million
Street Maintenance Fund: $191,649
Water and Sewer Operating Fund: $698,591
Sanitation Operating Fund: $315,293

Kelly advised that in normal economic conditions, this wouldn’t be a good idea, but since the economic recovery is slower than expected, it would be prudent to dip into the reserve fund and use the cost-cutting brainstorm sessions of the city’s department heads to enact more judicious spending for the 2011 general budget.

Furthermore, following up on Goodman’s suggestion to cut non-profit provisions, Kelly suggests reducing support over the next few years in order to provide the non-profits now receiving annually about $227,000 a comfortable transition period to seek alternative funding.

Goodman’s suggestion could not be voted upon during the study session. However, it will likely gain board support from board members who unanimously supported the idea during the study session.

ANNEXATION
In other matters, the board discussed the land annexation in the southwest corner of town. Director Gary Campbell admitted it would be good to have this land within the city limits, but he was concerned “with the $3 million we don’t have” to support the annexation.

The reality is that the annexation could cost as much as $4 million with no immediate return on the city’s investment. With the aforementioned shortfall and the slow recovery process, all board members, save for Mayor Baker, agreed it would be best to hold out for a healthier economic situation and revisit the matter in a year’s time.

“I wish we’d get this annexation thing straightened out. It’s to our advantage to have these areas. They bring a lot to the city. Not only quality of life for the citizens, but also revenue. It (Fort Smith) is just in little bitty pieces like a jigsaw puzzle, and one of these days we’re going to have to face up to it and do something about it, and once and for all, establish the boundaries of what Fort Smith really is because it jumps, and people don’t know,” Baker said in protest.

HIRING POLICY
City Director Kevin Settle asked that the board consider a policy that elected officials be prohibited from having a relative working for the city. Also, for those who serve in an elected position, they do not become eligible for city employment until two years after their term has expired.