Thursday, January 22, 2009


Response by Mayor James Valley To City Council 2008 Budget Questions
January 15, 2009
Mrs. Sandra Ramsey, City Clerk
CITY OF HELENA-WEST HELENA, ARKANSAS
P O BOX 248
HELENA-WEST HELENA, AR 72342
RE:          RESPONSE TO BUDGET QUESTIONS
Dear Madam Clerk:
I have been asked to explain the following scenario: Our 2008 Clean-Up Budget proposes to move $400,000.00 from the Sanitation Fund to the General Fund and another $114,000.00 from the Sanitation Fund to the Street Fund in order to clear up the negative fund balances and attempt to comply with audit expectations. I will, hereafter, attempt to elucidate the budget process and answer the question asked.
First, here is the definition of the general fund:
Secondly, here is the essential definition of the street fund:
(Error in original text).
Third, here is how the Arkansas Municipal League describes the General Fund:
Ironically, they call it an “animal shelter.”
Fourth, here is how the Arkansas Municipal League describes what we call the street fund:
Now, with those things set forth, I will illuminate our budgeting practices here in Helena-West Helena.
On December 18, 2007, we passed a budget which included this summary:
Projected Revenue
General                                                  $ 6,864,100.00
Street                                                      $ 1,064,064.00
Landfill                                                   $ 986,850.00
Sanitation                                               $ 1,515,000.00
Total Projected Revenue                     $ 10,430,014.00
Projected Expenses
Administration                                       $ 3,375,926.80
Fire                                                         $ 1,542,357.95
Police                                                     $ 2,040,269.08
Code Enforcement                                $ 77,682.60
Parks & Recreation                               $ 412,850.74                           (Over)/Under Budget
Total General Expenses                       $ 7,449,087.17                        $ (584,987.17)
Street                                                      $ 945,314.00                           $ 118,750.00
Landfill                                                   $ 983,883.25                           $ 2,966.75
Sanitation                                               $ 828,545.63                           $ 686,454.37
Total Projected Expenses                   $ 10,206,830.06
PROJECTED NET INCOME/(LOSS)                                                    $ 101,467.19
These projections do not include the landfill in the projected budget surplus. Additionally, the street fund was treated separately. Therefore, the $101,467.19 surplus is general fund without including or accounting for the Street, Landfill and Water Departments in the projected surpluses.
We budgeted to overspend our main general fund account by $584,987.17. We showed a budget surplus by subtracting our over-expenditure of funds from the surplus in the sanitation fund. That fund is comprised of general fund revenues generated from cardboard recycling plus residential and commercial garbage collection and disposal fees. Simply put here is how we had the budget surplus:
                                Sanitation Fees Remaining after Expenses:          $686,454.37
minus                    General Fund Expenses in excess of Revenues: $584,987.17
equals                   Projected Net Income/(Loss)                                     $101,467.20.
The one penny difference is likely due to rounding of numbers in the original budget calculation.
The street department, at the time of 2008 Budget’s passing, showed a positive balance of $118,750.00. That projected positive balance included an anticipated fee increase of $2.00 per month per water system customer to assist with the city’s mosquito control program. However, the city council did not enact the $2.00 per month fee and the projected $108,000.00 were not collected. Additionally, the street fund budget is based upon monies received from the “gasoline tax.” This tax is collected on each gallon of gas. This is a flat tax and does not change whether gasoline prices rise or fall.
Last year was a terrible year from the U. S. economy. One symptom was the sky high gasoline prices. As prices increased, usage decreased. With higher cost for travel and transportation, consumers purchased less gasoline and we, in turn, were remitted much lower proceeds from the gasoline tax than was anticipated. Our collections were about $163,000.00 less than the $880,000.00 we initially anticipated. We managed to survive by cutting spending in some areas and getting the assistance of the general fund for other items. Therefore, we did not overspend in the Street Fund. We did over project our revenues based upon conditions too precarious to truly predict at the time we made our budget. We essentially had a $271,000.00 shortfall in projections (collections) and only needed $114,000.00 to make up the difference in our budget. Had revenue collections tracked our projections, we would have had $157,000.00 in surplus monies in the street fund alone.
We had a budget committee meeting on December 15, 2008 at twelve o’clock noon. This meeting was attended by Mr. Marvin Jarrett, Mr. Don Etherly, Mr. Jay Hollowell, Mr. Joe St. Columbia and Mr. Joseph Dean. During that meeting they decided to move $514,000.00 from Sanitation Fund to cover the differences in the budget and make all categories show positive balances for the year end rather than merely have a positive bottom line. We are only required to have a zero (break even) balance or a positive balance in the bottom line. However, the committee wanted each department to show a positive balance for the year end.
To accomplish the desires of the committee, only $514,000.00 were needed because some of the projected revenues within the budget increased over projections while others decreased. At the beginning of that meeting the budget summary reflected the following:
Projected Expenses
Administration
 $  3,771,486.48
Fire
 $  1,549,480.54
Police
 $  2,080,256.96
Code Enforcement
 $       77,682.60
Parks & Recreation
 $     412,850.74
 Over/(Under) Budget
Total General Expenses
 $    7,891,757.30
 $     (397,639.33)
Street
 $      882,870.86
 $     (113,870.86)
Landfill
 $      981,483.25
 $         5,366.75
Sanitation
 $      812,545.63
 $      630,454.37
Total Projected Expenses
 $ 10,568,657.05
At the end of that meeting, and following a unanimous vote, the budget summary reflected the following:
Summary of Projected Income and Expenses
Projected Revenue
General
 $  7,894,117.97
Street
 $     883,000.00
Landfill
 $     986,850.00
Sanitation
 $  1,443,000.00
Total Projected Revenue
 $ 11,206,967.97
Projected Expenses
Administration
 $  3,771,486.48
Fire
 $  1,549,480.54
Police
 $  2,080,256.96
Code Enforcement
 $       77,682.60
Parks & Recreation
 $     412,850.74
 Surplus/Deficit Budget
Total General Expenses
 $    7,891,757.30
 $         2,360.67
Street
 $      882,870.86
 $            129.14
Landfill
 $      981,483.25
 $         5,366.75
Sanitation
 $    1,326,545.63
 $      116,454.37
Total Projected Expenses
 $ 10,968,657.05
PROJECTED NET INCOME/(LOSS)
 $      118,815.04
Previous editions of the clean up budget did not accurately show the carryover from 2008 to be $118,815.04. This carry over does not reflect the $5,495.89 in carry over from the street and landfill departments either. Moreover, since these numbers were prepared and estimated in October 2008, we have learned that our carry over was $511,808.78.
I believe this provides sufficient information to explain the needs being addressed in the clean up budget. Should you have any questions or concerns, please feel free to contact me.
Respectfully yours,
James F. Valley

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