I contacted the city about the report on KY3 about City Manager Bob Cumley asking all city departments to cut budgets 5% in the wake of a downtown in tax revenue. Here’s the response:
The City Manager’s Office, at City Council’s request, asked all City departments to prepare a budget exercise detailing how they would propose cutting 7 percent of their General Fund budget only. This information was requested in order to provide City Council with the potential impact that budget cuts would have on City services and/or personnel. Council will use this information for its discussion at a budget workshop being planned for late March.
Departments have been given the discretion of proposing budget cuts in either supplies/services and/or personnel, such as open positions they would elect not to fill.
The budget cuts may be necessary for one or two reasons. Currently, sales tax revenue is just under 1 percent below the same period last year. The City had budgeted for a 3 percent growth rate, so that’s a potential 4 percent decrease in sales tax if current trends hold. There are other tax revenue sources, such as the gross receipts tax, that may make up some of that difference so it’s not clear yet what the complete revenue picture will be at the end of the budget year in June.
The other issue Council will have to address is funding for the Police/Fire Pension System. In order to increase the annual contribution to the system, the City would have to cut back in other areas and Council wants a true picture of the impact of those cuts.
The General Fund is one portion of the budget. It is the area where the City has discretion in its spending and is basically the area of the budget that pays for core services such as public safety and public works. Other funds are designated for specific purposes, such as the voter-approved Capital Improvements funds or sales tax funds designated specifically for law enforcement, emergency communications, parks, or transportation. The City by law does not have the discretion to move revenue from designated sources into the General Fund to address either a budget shortfall or the contribution level to the Police/Fire Pension System.
Again, at this point, the budget cuts being proposed by Departments to the City Manager’s Office to provide to Council are considered an exercise for this year’ s budget process and no definite budget decisions have been made.
