FORT SMITH -- Fort Smith intends to take a conservative approach to its projected revenue next year in light of the coronavirus pandemic.
The Board of Directors discussed and established citywide budget goals for 2021, among other topics, during a special study session/budget workshop on Tuesday.
Ward 3 City Director Lavon Morton asked City Administrator Carl Geffken how the revenue for 2021 is being estimated as the pandemic is affecting department budgets. City Finance Director Andrew Richards said the city will respond "day by day" with consideration that revenue has been "relatively steady" so far. This is particularly the case with sales tax revenue, although utilities have been down to a certain extent.
Richards said that, although the city is not seeing a huge impact so far from the pandemic, "we're going to continue to watch that."
[CORONAVIRUS: Click here for our complete coverage » arkansasonline.com/coronavirus]
He said that the city will be conservative when it comes to revenue, as well as cautious.
"And we may adjust it month to month if we see more of what's happening," Richards said. "We didn't get the big V, the big dip and the rebound, that I feel like everyone was anticipating, and to some degree, we've seen increases over the same period the prior year lately. So I think we need to be cautious that, instead of a big V, we're going to see a slow decline."
Geffken said he believed that keeping the general fund flat is the best route because the impact of the pandemic is unknown and, he hopes, the approval of a vaccine that can "help life really return to normal."
A city schedule of revenue for the month ending June 30 lists the actual amount of sales tax revenue taken in that month at more than $5.3 million, well over the budgeted amount of more than $4.9 million. Similarly, the actual amount taken in year-to-date was listed at more than $30.5 million, which is more than the budgeted year-to-date amount of more than $30.1 million.
In terms of utilities, which include water and sewer, the schedule states the city took in more than $3.57 million in June against a budgeted amount of more than $3.54 million. However, the actual year-to-date amount, more than $23.2 million, is far below the budgeted amount of more than $27.2 million.
"Water and sewer is always the crapshoot for lack of a better word because at the first three to four months, utilities in 2020 was 15% down compared to '19, about flat with '18," Geffken said. "However, in '19, at the end of the year, total revenues were below 2018, and if we track closely to 2018, we will do well."
In Geffken's opinion, the city overestimated its utilities revenue for 2020.
The schedule of revenue also includes a section called intergovernmental, which includes state turnback and highway sales tax funds. The year-to-date total for that for 2020 was listed at more than $3.4 million compared with the budgeted amount of more than $3.7 million. Total franchise tax revenue year-to-date was listed at more than $1.7 million against the budgeted amount of more than $1.8 million.
"I think all the indicators make it look like we'll have a very good 2021, but that frightens me because that could actually lead to a dip, and then we'll be coming back to our department heads and saying, 'Cut your budget,' rather than have them think about it now, where they've been told that next year's budget will be difficult, and that we have to have a balanced budget," Geffken said.
During a news conference April 17, Geffken said he had asked city department heads for 10% across-the-board cuts, which at that point had finished being reviewed. Earlier that month, Geffken said he, Richards and Deputy City Administrator Jeff Dingman were reviewing these cuts, which will be presented to the city board at a future date.
Geffken said in May that all departments had curtailed their spending as if the proposed cuts had already been implemented. The board's consent is required for any change to the budget.
Richards wrote in a memo that the city administration uses the approved budget goals to guide departmental service objectives. A 2021 budget calendar states that city departments will submit 2020 service objectives, outcome/performance measures, 2021 service objectives, and completed budget packages for 2021 to the finance department by Friday. The board is set to review the 2021 departmental service objectives, as well as their correlation with the citywide goals for 2021, during a study session Aug. 25.