City ends fiscal year on positive note
HUNTINGTON — The city of Huntington ended the 2012-13 fiscal year on June 30 with a carryover of $3.4 million, marking a $4.5 million turnaround from two years ago.
Mayor Steve Williams, however, says that most of the carryover already has been committed to shoring up underfunded obligations and paying for goods and services that were authorized toward the end of last fiscal year but were not encumbered until this fiscal year.
Providing pay raises for employees and fulfilling City Council members’ capital improvement wish lists remain uncertainties, he said.
“I don’t want anyone getting the impression that we have a financial windfall, but we have been able to strengthen our balance sheet by showing that we are addressing our ongoing obligations and paying our bills,” Williams said Tuesday.
Williams and Finance Director Deron Runyon attribute the change in the financial picture to the 1 percent city sales tax. The tax has yielded approximately $8.93 million since it was implemented Jan. 1, 2012, exceeding the projected $5.81 million by 54 percent.
The sales tax was part of a tax reform package that the city implemented under the state’s Municipal Home Rule Pilot Program. The business and occupation tax was eliminated for manufacturers and reduced by half for retailers and service businesses.
The robust results, Williams and Runyon said, were largely because the sales tax is collected by the state Tax Department, which has more collection powers than the city.
“The sales tax was truly a game changer for us last fiscal year,” Williams said. “It was a measured risk in the beginning because there were concerns that it would be a detriment to the business community, but that hasn’t been the case.”
Should sales tax revenues continue at a strong pace, Williams said he would support creating a capital improvement budget and dedicating a portion of the revenues for specific infrastructure projects, similar to the $1 million that the city has set aside for paving in each of the past five years.
“Other cities seeking a sales tax through the home rule program want to use it as an opportunity to bond certain infrastructure improvement projects, but that’s not my plan now,” he said. “For starters, we haven’t even considered it. But secondly, I’d like to avoid taking on any additional debt if possible.”
Despite the $3.4 million carryover on paper, the city only has about $200,000 of unassigned funds available right now, Finance Director Deron Runyon said. About $1.2 million of the carryover was already committed for goods and services that were authorized toward the end of last fiscal year but were not encumbered until this fiscal year. The city’s paving contract represented a bulk of the encumbered funds, Runyon said.
Another $2 million was assigned to four ongoing obligations: a payment to the city’s property and casualty insurance provider; a city-funded health benefit account for employees; the landfill closure account; and shoring up the city’s workers’ compensation reserve account, a necessity to maintain a letter of credit for the program. Huntington City Council approved the funding measures in a budget resolution earlier this week.
If the city’s revenue collections outperform projections and expenses are kept in check, there will be more “spendable cash” toward the end of this fiscal year, Runyon said. Through Sept. 23, or with 23 percent of the fiscal year in the books, the city had collected 23.3 percent of budgeted revenues and spent 21.3 percent of budgeted expenses. The city has a $45.9 million budget this year.
In addition to creating a capital improvement budget, Williams said pay raises for employees remains one of his priorities.
“It’s something we’re trying to work toward as we monitor our budget,” he said. “I’ve asked (Runyon) to prepare fiscal notes to determine what raises would cost, but I have absolutely no idea at this moment what we could offer.”
All three employee unions have annual wage reopeners in their contracts, meaning the mayor and City Council must address the issue of pay raises every January.
Follow H-D reporter Bryan Chambers on Facebook or Twitter @BryanChambersHD.