Although he is pleased with North Little Rock's draft budget for 2017, Mayor Joe Smith nonetheless has issued a warning for the city's financial future.
North Little Rock's proposed $66 million general fund budget for next year includes 2 percent across-the-board raises for full-time city employees and a savings of $386,767 in health and dental insurance premiums paid by the city for its employees. Separate salary negotiations with police and fire unions are ongoing.
The draft budget, which earned positive reviews from aldermen in a budget workshop Wednesday evening, is a 2.5 percent increase over the 2016 budget. The City Council plans to vote on a completed budget at its Dec. 12 regular meeting, Smith said.
However, Smith cautioned that the proposal requires taking $2.3 million out of the city's $15 million in reserves, nearly double the $1.25 million the city had to use to balance its 2016 budget.
"That's not fun for me," Smith told council members. "We have to start thinking about how to add revenue. Our [revenue from] sales taxes are flat.
"I don't see our sales tax [revenue] going up anytime soon," Smith said. "At some point and time, we will have to start looking at increasing our revenues."
Cutbacks are most likely in 2018, the mayor said, for the nonprofit organizations that receive annual funding under special appropriations from the city's general fund. Smith sought reductions for those groups in 2014, but backed off and renewed full requests from most of the groups for the next year.
A five-year budget projection led to Smith's 2014 call for cutbacks and for adopting more efficient methods of controlling spending and utilizing existing means for revenue. The projection -- which didn't account for the savings incurred since then -- showed that the city's fund balance would be depleted by 2018 if changes weren't made.
The city's financial picture isn't near such a bleak point again, Smith said, but he doesn't want to keep taking from the city's reserve fund each year to balance budgets.
"The bad news, and the message I want to deliver about the special appropriations that go to the nonprofits, is that I would anticipate for 2018 the nonprofit appropriations will be half of what it is in 2017," Smith said, later adding "if not more."
"That's because of the issue of us slowly bleeding to death," he said. "So I want you to think about that as [those groups] prepare 2018 budgets."
For now, the city is able to keep doing things it needs for long-term upgrades, and to preserve funds for maintenance and repairs to avoid large, unexpected expenditures in the future.
"This is pretty good budgeting I think," Smith said of the proposed budget.
Among expenditures in the budget are a 3 percent increase in pension contributions to nonuniformed employees; increasing special appropriations from $5.9 million to $6.3 million; $138,000 to repair the dam at Lakewood Lake No. 1; replacing six emergency warning sirens in 2017 and another six in 2018; and a new $50,000 appropriation to the Argenta Arts Foundation.
North Little Rock replaced four nonworking emergency, or tornado warning, sirens this spring under a $125,000 contract that allowed an option to buy four more each year over the next three years to replace all 16 of the city's sirens. The current sirens are from the 1960s or 1970s with outdated technology. The city will be able to increase its order to replace all within two years, city Finance Director Karen Scott said.
"We have the money for six more tornado sirens in '17 and the other six in '18," Scott said.
"A big thing in the budget document is probably Parks [Department] taking over AIMM," Scott said, referring to the Arkansas Inland Maritime Museum. The City Council approved the move earlier this year. "The expenditure to the general fund will be the same. Instead of having a transfer to AIMM, we'll have a transfer to Parks of $150,000. AIMM employees will become Parks employees Jan. 1."
Smith said the proposed budget also includes $90,000 for the Patrick Hays Senior Citizens Center to put away for repair expenses as they arise in coming years, such as replacing the roof or air conditioning. The center opened in 2003 and expanded in 2007.
"We realize that building is almost 14 years old," Smith said. "This amounts to a reserve to use as needed. I think it's a wise decision."
This is the first year for Scott to prepare the city's budget via an updated computer software program installed in the spring. The system provides more details, eliminates the need for manually keying in revisions line by line and allows for departmental notes on budget requests. All information is available for all department heads and aldermen to access online anytime for review and updates.
"Not that they weren't able to see that information before, but they would have to call me," Scott said. "Now the information is right there at their fingertips. And all department heads met their deadline."
Metro on 11/13/2016