The city will look at savings within each department to cover a potential $2.3 million *shortfall in sales tax estimates for fiscal year 2010, Mayor Harvey Johnson Jr. told council members today.
"We're not immune to tax sales shortfalls," said Johnson, who informed council members that the city's current sales taxes are suffering a $1.5 million shortfall. He said he predicts a $2.3 million shortfall at the end of the fiscal year if the trend continues, and announced that it was "better to pay attention to the situation now than to wait three or four months down the road."
With only Ward 6 Councilman Tony Yarber, Ward 2 Councilman Chokwe Lumumba and Council President Frank Bluntson in attendance, the council budget committee did not have a quorum. With an hour to spare, however, the mayor spoke unofficially with members on the dismal numbers.
Bluntson pointed out that Hinds County Tax Collector Eddie Fair predicted additional revenue for the city through property taxes.
Johnson said he interpreted Fair's assessment to mean city property taxes would likely remain stable, though flat, despite the annexation of about 1,000 new homes and businesses in the southern portion of the city. He added that new revenue from home reappraisals reported by Fair would not have an impact from 2009 to 2011.
Despite this, the mayor predicted no cuts in city staff or city services to counter the revenue slump. He also said the city would not be tapping the its budget reserve, which determines the city's credit rating on many bond projects. Johnson boasted that the city retains 7.5 percent of the total city budget in reserves, and that the city will come out of this adjustment with 7.5 percent of the reserves still untouched.
Instead, the city will take the money from the municipal budget's fund balance, a fund that contains leftover, unallocated funds from each department. Last fall, Johnson managed to plug a $2 million hole and shore up a shortfall in the city's insurance fund at the beginning of the fiscal year 2010 budget after uncovering $4 million in allocated budget money from the previous year that went unspent by the Melton administration. At the time, Ward 1 Councilman Jeff Weill questioned how the administration had pulled unused money from a city budget so perforated with shortfalls.
More specifically, Johnson plans to adjust for the revenue shortfall by using leftover cash from individual departments, which the mayor praised for making careful decisions and saving money in the first quarter through "careful hiring practices."
"Our departments have done very well in savings, so that $2.3 million is not necessarily going to come out of the operation side. We've been so concerned about keeping spending under control in the first quarter of the budget year that it worked. I can't say how pleased I am that our people buckled down in that first quarter and allowed us to come out of that quarter with savings. To not have that spare $2.3 (million) now with these shortfalls would have put us in a real pickle," Johnson said, but then revealed a remorse at the prospect of tapping departments: "Clearly, if someone saved a lot of money, they shouldn't be penalized by taking that money away, but we've got to balance the budget."
Nina Holbrook, executive director of the Metrocenter Area Coalition, said the drop in sales tax is largely the result of businesses leaving the city of Jackson.
"We've had a problem with the national recession, but we've also lost many industries over the last six months. We've lost Belk, and numerous car dealerships. We lost Barnes & Noble some time ago, and we've lost quite a few restaurants. Our tax base dwindles, and Madison and Rankin counties keep growing," Holbrook said. "Jackson is the capital. It should have the advantage, but when you've got code enforcement that's not being taken care of, people and businesses avoid the city."
City spokesman Chris Mims took issue with Holbrook's assessment, pointing out that the entire state and nation are suffering from a recession. Johnson said he anticipated the recession to continue, noting that the state of Mississippi has already adjusted its own budget a total of five times for the current budget year.
Weill said he was grateful Johnson covered the shortfall without tapping the reserve fund or raising taxes, but pointed out that the city still wastes money on services that he considers unnecessary.
"The city spends a lot of tax money on items that are not essential. We've got scores of tennis courts and many golf courses and swimming pools that we support when we really should be spending it on the essential things," Weill said, adding that he was grateful the administration was addressing budget issues months in advance. "Hopefully, with the amount of time we've got we'll be able to determine what's essential and what nonessential."
In a previous article, the Jackson Free Press incorrectly stated that the city was facing a $4 million budget shortfall. We apologize for the error.
I think that tennis courts and golf courses *are* essential quality of life services.
Yeah. As long as you don't crash into a pothole on your way to the links, you'll be fine.