Conway City Council members sat quietly and seriously as the city finance director told them his proposed fiscal 2012 budget is 10.4 percent less than the city's current spending plan.
The drop in the overall budget proposal - to $27.9 million - reflects a drop in revenue, particularly in building and permit fees, and unavoidable increased costs for things such as fuel and wholesale water and sewer service, Finance Director Michael Hardee told the council at their retreat Friday.
The projected budget does not call for any increased taxes or fees, nor does it include raises for city employees for the third year in a row.
The almost $28 million figure includes the $1.4 million purchase of a new fire truck and estimated revenues and expenses from the new city recreation center.
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Without those two items, the drop from this year's $31 million budget is nearly $5.5 million, or 17.6 percent.
"Please remember," Hardee cautioned, "these are all moving figures right now."
Conway's situation is no different from many other municipalities. There isn't as much money flowing in as there used to be, and the smart money managers will account for it when they set a plan.
The hand-wringing has just begun.
City Administrator Bill Graham said that while the budget includes the purchase of a new fire truck, there are still about $3 million in capital expenses that have already been delayed for two years and which make him uneasy to think of putting off yet again.
Spending more for capital items - vehicles, machinery, equipment, buildings - will be difficult at best without making some staff cuts to pay for them, he said.
No decisions have been made yet, and council members will debate their pros and cons in setting next year's spending plan.
The city is in good shape financially, Graham said.
But he noted that it has dipped into its fund balance more than he'd like to maintain an even keel in the stormyfinances of the past two years.
The projected undesignated fund balance in the proposed budget is $6.5 million, still a healthy 39.9 percent of the projected $16 million general fund.
Graham, though, talked as though the new economy is a permanent thing and said the city must operate each year within its total annual revenues.
"We feel like there is a responsibility to do that going forward so we don't jeopardize the financial position of the city," he said.
Cutting staff isn't the only tool in council members' pockets. They are also considering a four-day workweek for stormwater, streets and utility employees. That would save some fuel, but not a whole lot.
The majority of the city's gas is used by the police and sanitation departments, and changing their schedules is not realistic, Graham has said previously.
Council members also will look at putting a fuel storage facility at the city's public works complex, a move that would allow it to take advantage of the days when fuel prices drop and perhaps bargain for a better price for bulk sales.
But the numbers that need to go into the deliberation are sobering:
Property tax income is projected to increase by $30,000 but vehicle taxes likely will drop by $70,000. Penalties for late payments are expected to be up, but not enough to offset the difference.
Building and permit fees are estimated to decrease by $94,900, a drop of 37.2 percent.
Business license revenue could take a $100,000 hit, which would surpass the drop this year. The result is a 5.4 percent loss in that income stream in just two years.
Fuel costs are anticipated to increase by $227,050, unless the price jumps above $3.50 a gallon. Then the increase will be more.
Wholesale water and sewer charges the city pays Grand Strand Water and Sewer Authority will be up about $173,750.
The good news, if there is any, is that the $1.4 million for the new fire truck in the budget is really an accounting veil. The whole price must be in a single budget, according to professional practice, but the actual amount to come out will be the sum of one annual payment.
"We know we will need additional discussions," Graham said.