North Little Rock plans to follow a general fund budget in 2019 that city officials say would hold a tight rein on expenditures, even with a full 12 months of additional tax collection beefing up city revenue.
A draft 2019 general fund budget of $67.3 million -- a $749,936 increase over this year's budget -- will be proposed for discussion at a special 5 p.m. meeting Tuesday of the City Council. The council is scheduled to vote on approving the budget in December.
Voters approved an additional 1 percent city sales tax in an August 2017 special election that took effect Jan. 1. Because tax turn-back from the state takes about two months, the city didn't receive any of that additional revenue until March.
One-half of the 1 percent is a permanent tax that goes into the general fund, which pays for city operations, services and employee salaries and benefits. The other half percent, to expire after five years, is earmarked for a new police and courts building, fire station renovations, and streets and drainage.
Mayor Joe Smith based his tax proposal on a list of critical needs for the city so it could avoid cutbacks and layoffs while also building up a once-depleting reserve, he said during a series of community meetings. In the proposed budget, revenue would outpace expenditures by about $2.5 million, money that could be socked away at the end of next year.
"That was the message once the sales tax was passed," Smith said last week from Los Angeles, where he was attending a National League of Cities conference. "We're spending money we need to in order to do the services that are necessary and that our citizens expect. We have a great bunch of department heads, and they understand if they can get one more year, say, out of a pickup truck, they will.
"We've been able to maintain everything about the same," he said. "We have more money for streets and drainage than we've ever had before. That's what I'm proud of. We're not dipping into any of our fund balance in the 2019 budget, so I'm pleased."
Years of transferring money from the city's reserves, or fund balance, in order to balance the city's annual budget was depleting the city's financial safety net. Instead of reserves having dropped to $9 million to start 2018, which was projected if the tax hadn't passed, the city has about $18 million on hand, city Finance Director Karen Scott said.
"We're anticipating the fund balance to be somewhere around $20 million" by 2019's end, Smith said. "When I took office [in 2013], it was $7 million. We've been frugal with the taxpayers' money and been re-creating that rainy day fund to almost three times what was normal. I'm really pleased with that."
The new sales tax, combined with a previous 1 percent city sales tax, is projected to produce revenue in 2019 of $33.8 million, a cautious forecast, Scott said.
"As far as revenue projections, I always try to be conservative," Scott said. "I don't want to project revenue that I feel like we can't collect.
"Our city sales tax is slightly down and [Pulaski County's] is slightly up," she said. "Between those two sources, that tax revenue is about flat."
One budget-reducing effect on the general fund is the creation of a separate information technology department that will have its own $3.4 million budget. Of that amount, $1.83 million is a transfer from the general fund. The department will combine information technology personnel that had been assigned to separate city departments.
"All of those employees that are now in four different budgets will all be under one budget," Scott said. "It's not that the general fund necessarily will not have those expenditures, it will just be reported as transfers."
Some savings in the budget include avoiding an increase in the city's cost for paying 100 percent of employees' health insurance premiums. Because the council approved 2.2 percent, across-the-board pay increases that took effect in August, no additional raises are budgeted for 2019.
The "big ticket" expense items, Scott said, come under special appropriations. Those costs include $940,000 to build parking lots around Argenta Plaza and the planned First Orion office building adjacent to the plaza, all to be available to the public. An upgrade to the city's 911 system is estimated to cost $337,000.
Another $186,000 from special appropriations will go toward a $286,000 BearCat armored personnel carrier and rescue vehicle for the Police Department. The remaining $100,000 will come from the Police Equitable Sharing Fund consisting of seizures of drug money. BearCats are used for transporting SWAT teams, and recovery and protection of people in shooting situations or natural disasters, according to vehicle descriptions.
"It's more of a rescue vehicle, basically," Police Chief Mike Davis said. "It holds a lot of people. It's really less like a military vehicle than anything we've had. The military look of [such vehicles], to me, is not something you want to put out there."
Smith said he was OK with the additional expense for the Police Department.
"It is a pretty expensive piece of equipment," Smith said. "If our guys in the Police Department say they need it, I want them to have it."
Scott said individual department heads have been good about avoiding requests that "are exorbitant or not necessary."
"Except for a few high-dollar things that are new, there's not much difference from what we've done in the past five years," Scott said. "We have held pretty true to what we promised voters. We weren't going to have this giant Christmas wish list. We continue to budget efficiently and use the money we have as effectively as possible."
Metro on 11/11/2018