LITTLE ROCK — Little Rock city directors grappled Tuesday evening with money, or the lack of it, discussing options for dealing with an impending $6 million deficit in the planned $131.1 million general fund budget for 2011.
Finance Director Sara Lenehan presented a list of budget adjustments that would offset the loss of about $2.75 million in utility company franchise fees, an amount constituting almost half the expected deficit.
The city crafted its $131.1 million general fund budget expecting about $650,000 more from CenterPoint Energy and $2.1 million more from Entergy Arkansas in franchise fees. Utilities pay the city a percentage of their revenue for using public rights of way. The city now predicts it will earn considerably less from the gas and electric utilities.
One bright spot in the utility picture is that the city’s utility bills have been lower, Lenehan said. Savings of about $118,500 will be applied to the potential shortfall, she said.
Lenehan also recommended that directors apply the insurance proceeds from a fire that destroyed the University Park Adult Leisure Center in October to the budget. The insurance payout was almost $1.5 million.
The suggestion made some directors cringe.
“It’s like having your car stolen and using the insurance money to pay the light bill,” Gene Fortson said. “The idea is very distasteful to me.”
City Manager Bruce Moore acknowledged that using the insurance money was not a preferred method of balancing the budget.
“This wouldn’t be my No. 1 recommendation on balancing the budget, but, as you all know, we have scaled this organization back significantly,” Moore said. “We have 170 vacancies when you consider all of the departments. There’s just nowhere else to cut.”
Moore also noted that the directors must decide what to do with the leisure center property.
“First of all, we couldn’t build it back this year even in the best-case scenario,” he said. “I do think we should have some community dialogue about what happens with that property.”
Lenehan noted that a coming increase in fees for alcohol permits would yield $89,250. The city adopted the ordinance increasing the fees on June 1.
The city ordinance tripled the cost of a wholesale liquor permit for beverages with more than 5 percent alcohol content from $500 annually to $1,500. Beer and light-wine wholesalers now have to pay an extra $200 for their permits.
The ordinance also increased the fee for retail liquor-sale permits from $250 to $425.
Hotels and restaurants with fewer than 100 rooms or seats, respectively, will have to pay an additional $250, and larger establishments will have to pay $500 more for their liquor permits.
Lenehan’s proposal also calls for a $416,295 reduction in special-project allocations that would cull budgets for weed lot maintenance, demolition and facilities improvements.
She noted that if all the recommended adjustments were applied, the general fund would show a net loss in revenue of $835,041 and a net decrease in expenditures of $410,601, leaving a shortfall of $424,440. That shortfall could be covered by reserve funds, she said.
Moore said the recommendations reflect his attempt at avoiding any more cuts in personnel, particularly by requiring employees to take unpaid furlough days. He said he could not say how much a furlough program would save the city in personnel costs.
City Director Michael Keck said that while he was not advocating furloughs, he wanted Moore to present the board with details of how furloughs would affect the city and its employees.
“I just want to see it spelled out in front of me,” he said.
City directors are expected to vote on budget adjustments at their July 6 meeting. The city’s budget year runs from Jan. 1 to Dec. 31.
Arkansas, Pages 7 on 06/23/2010