< Full site
Another $700,000 slide expected in Kingman budget
Sluggish economy forces change in financial philosophy at City Hall
4/23/2013 6:00:00 AM
By Doug McMurdo
KINGMAN - City Manager Jack Kramer succinctly summed up the financial challenges Kingman faces as a stagnant economy continues to erode the city's bank accounts.
"We're trying to match today's costs with yesterday's revenue," said Kramer at a public hearing Friday regarding the city's preliminary budget for fiscal year 2013-2014, which begins July 1.
The city's general fund balance declined by $700,000 at the end of fiscal year 2012 and Kramer expects it to take another $700,000 hit when the 2013 fiscal year ends June 30.
The $1.4 million used to provide services is money spent beyond what the city collected in revenue.
Kramer said the bad economy has prompted the state and federal governments to keep revenue that was previously redistributed to the city. That, in turn, has left the city with serious revenue shortfalls.
The economic slowdown, said Kramer, has forced the city to essentially abandon the "growth-pays-for-growth" financial philosophy it embraced during the prolonged boom years.
Things could get worse if the Legislature completely reformulates how construction sales taxes are paid. Mayor John Salem has said having subcontractors pay sales tax at the point of sale could cost the city about $300,000 a year.
Also, the city a couple of years ago repealed local impact fees with the exception of wastewater in an effort to spur development.
Kramer said the city has been conservative in both spending and budget practices, but providing certain services and paying for manpower that was previously paid with state and federal grants that have largely dried up.
Grants that once paid for five
Kingman Police Department
resource officers at city schools, for example, are now paid entirely out of the general fund.
The city's grants fund is expected to shrink from about $6 million in 2012 to about $4.8 million in 2013, a decrease of roughly $1.2 million.
While the City Council voted unanimously to increase the sales tax by one-half-cent starting July 1, that measure is seen as a temporary fix until a permanent revenue stream can be identified.
The proposal is to create the revenue stream either through the implementation of a property tax or a fire district.
In the meantime, the city will struggle to provide essential services until the economic ship is righted.
Gas taxes, formally known as highway user revenue funds, or HURF, are the primary funding source for the city's street department.
Kramer said that funding is down about $500,000 annually, but it will increase by more than $600,000 next fiscal year, according to the report, to a total of about $3.5 million.
The timing is particularly critical for the city since capital purchases have been deferred as long as possible.
The city must replace police and fire vehicles, a KART bus, a public safety mobile data system and an automated fingerprinting system.
"We have continued to defer the automobile and equipment replacement programs in many departments," said Kramer. "And down the road, this may come back to haunt us as we are seeing now in the information technology area."
The city has also deferred investments into computer system upgrades and other costs of running city government.
With revenues shrinking, the city still has to struggle with funding its five-year capital improvement plan that now exceeds $200 million.
Click for home delivery with comics, grocery deals, inserts, TV listings, coupons and more
Alert neighbor recognized with Kingman lifesaving award
Ham it up - in an educational way, of course
Breast cancer fundraisers ongoing throughout October
Trial under way for driver in deadly high-speed chase
Doland Springs man arrested for pipe attack
Kingman voters to decide fate of proposed property tax
Former Disney VP headed to Grand Canyon Resort Corp.
Supervisors still struggling with changes to Mohave's PTO policy
Kingman Daily Miner Home
< Full site
Copyright © 2015 The Kingman Daily Miner / www.kdminer.com
, All Rights Reserved