Tuesday, May 5, 2009

Proposed city budget keeps $1.6 million surplus; $500,000 of it is grant for proposed nursing home

By Bryan Kennedy
University of Kentucky School of Journalism and Telecommunications

The proposed budget for the fiscal year that begins July 1 shows that the City of Midway will continue to have more than $1.6 million remaining in unused money.

At Monday night’s meeting, the council gave first reading of the 2009-2010 budget and appropriations ordinance. The budget lists all appropriations of $1,388,970. After subtracting the appropriations from total resources the city will have an estimated General Fund balance of $1,691,796 – the same amount it expects to have left over at the end of the current fiscal year on June 30.

The council did not discuss the surplus at last night’s meeting. Two ideas for extra spending have been presented, but none would take as much as even 5 percent of the amount of money that the city has left.

Last night, the council authorized a $419,600 grant application for an emergency generator for the water plant, needed in light of major acts of nature like the ice storms this year and in 2003. The city’s share of the cost would be 13 percent, or about $54,500. Mayor Tom Bozarth said the budget could be amended to include the expense, but he did not mention the surplus during the meeting.

Last year the city budgeted $5,000 for sidewalk restoration, but the original version of the proposed budget called for $3,500. At the last meeting, Council Member Diana Queen suggested $30,000 be used to restore sidewalks, with pilot projects to help property owners improve safety and encourage others to do likewise. The proposed budget now calls for $10,000.

“It’s a start,” City Clerk-Treasurer Phyllis Hudson told Queen, who indicated that she wanted to talk about raising the appropriation even more.

The sidewalk restoration and generator proposal are the only ideas currently on the table to begin using the money that the city has remaining. Even if the council passed $30,000 along with the money for generators, the city would still have over $1.6 million remaining to be used. The question still remains, what will the city do with the funds left over?

That’s a good question, Queen said after the meeting. She is a proponent of spending the money wisely and keeping a balance between costs and revenue, but also wants the city to start to make a plan on what the money should be used for in the future.

“It is very important that we are meeting community needs,” says Queen, “There needs to be a strategic plan set for the next couple of years.”

Queen, who is in her third year on the council, said the money left over could be a result of conservative spending by the city in recent years, and the city’s obligation to pay the debt on the failed Midway Station industrial park, now slated but not guaranteed to be a residential and commercial development.

Once Midway Station’s fate is known, hopefully in December, “I want to know where the big picture is going,” Queen said. “There are projects that need to be done here in Midway in the future.”

Bozarth and Hudson referred reporters and others to the city auditor to get answers to these questions: How long has the surplus been accumulating? Why has it been allowed to accumulate? How might the city use the money?

UPDATE, May 13: In response to written questions from reporter Sarah Livesay, Bozarth said "a substantial part" of the surplus is earmarked grant money, which can be spent only for the designated purpose. Most or all of that is a $500,000 grant to help build a nursing home. As for the rest of the surplus, he said, "We do not believe it is unusual, especially in light of the economic downturn our country is facing, to have a cash reserve and to be on sound financial ground."

Another reason for the surplus is an unexpected $552,000 windfall that the city received in 2007-08 from the insurance-premium tax. Insurance companies pay such taxes to the state, which sends the money to cities, so city officials know only that the money came from taxes on premiums on just two policies.

In responding to a question about a proposed increase in payments to the city attorney, Bozarth revealed that the city is contenplating annexation. "We are anticipating that there will be additional legal services relating to issues involving the development of Midway Station, annexations, open-records requests, the proposed nursing home and the re-writing of ordinances," he said.

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