Thursday, May 14, 2009

City officials defend big surplus in proposed budget

By Bryan Kennedy
University of Kentucky School of Journalism and Telecommunications

On Monday, the city council will look to adopt the city’s budget for the 2009-2010 fiscal year. Although the budget will be read for the second time, council members still have no plans for the more than $1 million in money not appropriated.

The budget proposed by Mayor Tom Bozarth will result in $1,691,796 remaining in the city’s bank accounts. The city would start and end the next fiscal year, beginning July 1, with the same amount of unappropriated funds.

Half a million dollars of the apparent surplus is actually a grant that can be spent only to build a nursing home, but even without that amount, the surplus is more than the city expects to receive in tax revenue next year.

Bozarth says the amount left over is not unusual especially in light of the recent economic problems. “The figure represents all of the city’s assets,” he said. “A substantial part of this represents grant money received by the city that is earmarked.”

Council Member Sharon Turner, chair of the council’s Finance Committee, agrees with Bozarth and says the amount left over is not cash sitting in the bank.

Much of the surplus is the $552,000 windfall Midway received in 2007-08 from the tax on two insurance policies. The city has yet to use this money.

Council Member Charlann Wombles says the council has to make sure they stretch money as far as it can go. Now with the extensive amount remaining she hopes the money will be used in new areas.

“We hopefully can address some areas that need to be addressed that we haven’t been able to even consider previously,” said Wombles. Other than sidewalks, which got a more money between the proposal of the budget and its first reading, Wombles didn’t have any other examples of areas that could be focused on.

Council Member Aaron Hamilton says he isn’t sure how long the money has been accumulating, but says it could help in case of a tragedy.

“We have to have money for any surprises,” Hamilton said. “You don’t want any disasters to hit and us not be ready.”

Sandra Cooke is another council member in favor of saving the money in case of an emergency. Having to fill sinkholes as a result of collapsing limestone caverns is one example she said the money could be used for.

“It’s always a good idea to have a surplus going into each year because you always have contingencies,” said Cooke. “Also something you had planned to do in the future may cost more because prices are continuing to go up.”

Cooke also said the leftover money could be used to pay bank loans in the event that housing and commercial development of Midway Station, a failed industrial park, doesn’t begin as scheduled. If Dennis Anderson decides to pull out and no other developers are found, Midway could again be responsible for paying a portion of the interest on debts for the past development. If Anderson doesn’t keep his end of the bargain, the city and county could have to pay more than $185,000 each in yearly interest payments.

For the time being, the city doesn’t have to pay the interest, so it will use that money for other expenses, Turner said. Previously, pots and plants were donated, but now the city has budgeted $1,500 for plants downtown. She said the city has also budgeted to use this money for a new Web site, sidewalks and increased attorney fees.

Bozarth said when the budget was proposed that more attorney fees were included because the city is keeping its lawyer busier than expected. “We are anticipating that there will be additional legal services” in the coming year, he said, “relating to issues involving the development of Midway Station, annexations, open-records requests, the proposed nursing home and the re-writing of ordinances.”

In the proposed budget several programs are allotted more money than in the previous year; one of those was appropriations for equipment and maintenance of streets. Bozarth says the city will buy a new leaf machine and more salt, and Hamilton says a new wood chipper is also will be purchased.

Council Member Doris Leigh was absent from the last meeting. She referred all questions regarding the budget to other members who were present.

Turner says by the time the council meets Monday at 5:30 p.m., members should have all questions regarding the budget answered and be ready to adopt the budget.

For an earlier story on the budget, click here.

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