The City and Borough of Juneau had a smaller than expected budget deficit last fiscal year, largely because of belt tightening by the city manager’s office.
CBJ Finance Director Bob Bartholomew on Wednesday told the Juneau Assembly Finance Committee that the city used $3.3 million in fund balance in fiscal year 2012, which ended in June. Fund balance is surplus money left over from previous years.
The original budget called for using $7.2 million in fund balance. Bartholomew said an updated estimate from March put the amount of rollover funds needed at closer to $4.9 million. So how did it get down to $3.3 million?
“That reduction is primarily coming through reduced expenditures,” Bartholomew said. “It was direction from the previous manager, the current manager, and department heads, looking for how to control costs.”
Bartholomew has been Juneau’s Finance Director for about six months. He replaced Craig Duncan, who retired at the end of May.
Duncan estimated the city would have just under $97.3 million in revenue last fiscal year. But it ended up with slightly more, at $97.5 million.
“The prior Finance Director was a very good estimator,” said Bartholomew. “We did collect what was budgeted and that’s a good sign.”
Most of the city’s revenue – about $84 million last year – comes from sales and property taxes.
In a perfect world, Bartholomew said the city shouldn’t have to use fund balance, because revenues would meet or exceed expenditures. For this fiscal year, the city has budgeted spending just $427,000 from fund balance. Next year, Bartholomew says there should be a $932,000 surplus.
“We have projected 3 to 4 percent growth in sales tax, which is a lot,” he said. “But so far in FY13 we’re on track. The FY14 revenue includes an approved increase in the mill rate.”
City Manager Kim Kiefer said this year’s budget and next year’s include more than $10 million in spending cuts made since the manager’s office started its belt tightening in response to revenue declines caused by the national recession. She says any more cuts would result in reduced city services.
“We know there’s no more money on the table,” Kiefer said. “We’re now to the point where we have to stop doing things.”
Kiefer said she would update the Assembly on union negotiations in an executive session on December 17th. Nearly half of city spending goes toward personnel services.
The manager also said she’d be seeking Assembly guidance on the FY14 budget. The Assembly approves the spending plan on a biennial basis, but is able to make some changes to the second year based on the latest information.