http://www.nwaonline.net/articles/2008/08/06/news/080708fzfaycouncilbgt.txt
The Morning News
Local News for Northwest Arkansas
Fayetteville Council Wants Budget Balanced Without Using Reserve
By Skip Descant
The Morning News
FAYETTEVILLE - The rainy-day fund is off-limits.
When Paul Becker, Fayetteville's finance director, brings his first draft of the city's 2009 budget to the council in a few months, it must be balanced, the Fayetteville City Council told him Tuesday night. And it cannot reach into reserve money to achieve this.
The goal of the balanced budget resolution, said Bobby Ferrell - the council member who put the idea forward - is to limit the level of discretionary spending.
"I think there's a difference between where the administration wants to focus money and where the council wants to target," Ferrell said Wednesday. He offered as an example the redevelopment of the downtown square. The city's share of the project was $460,000.
"We thought it was going to be about new curbs and gutters," said Ferrell. "Well, they've done a lot more than new sidewalks. You know what this is really about - communication."
But ultimately, he hopes his proposal will keep the city's spending on the straight and narrow.
"Plan your work, and work your plan," Ferrell said. He views running the city somewhat the same as running a business, he said. And part of the reason for tightening the city's purse strings is the less-than-robust national economy, Ferrell said.
"The economic indicators are not looking very good right now," Ferrell said.
But the idea, which Ferrell termed "fiscal sustainability," did not sail through the council. It passed 5-3. Council members Brenda Theil, Adella Gray and Robert Rhoads were opposed to the measure.
The move also was opposed by the mayor and city staff members, who argued the resolution would "tie the hands" of the finance staff members and department heads as they prepare next year's budget in a climate of budget uncertainty because of the erratic state of markets and the difficulty at predicting sound cost estimates.
"I don't want to tie their hands with this type of request," Coody said Tuesday night.
In years past, Becker said, some of those hard-to-predict costs were absorbed by using money from the reserve fund - with the council being the arbiter to say "yes" or "no."
Fayetteville's reserve fund stands at roughly $5.5 million, Becker said.
The aldermen hinted a balanced budget could put the city in the precarious position of laying off employees or not funding much-loved programs, said some of the aldermen.
"This is having everything cut out and then having to lay people off, and then have the council put people back in place," Thiel said. "I'm not going to approve a budget with layoffs. I can't support this even though I support the concept."
"Mayor, the intent here is not to 'tie hands,'" Ferrell said. He added he did not envision essential personnel - such as emergency officials - as a possible area to trim.
"We are not going to cut city services," Ferrell said.
"And, yes, there is an intent here for people to tighten things up," he continued.
City staff members say they will work to achieve Ferrell's request for a balanced budget. But in the end, Becker said, the draft he creates likely will reflect the mayor's priorities.
"The mayor is still going to bring forward a budget that finances the city in the way he feels it needs to be financed," Becker said. "We will come back with the best proposal we can."
Sales tax collection, which has been slightly stronger than Becker predicted, may not be enough to give the city extra spending money next year, he said.
"I expect us to come out right about where I planned," said Becker, who noted it's still too early to tell what the city's ending fund balance will be.
BY THE NUMBERS
2008 Fayetteville City Budget
Income: $70,501,977
Expenditures: $66,653,929
Source: Staff Report
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