City Budget

[MichaelC]

Article from Tulsa World

"Past cuts leave little flexibility, city's finance director warns

Finance Director Mike Kier confirmed to city councilors Tuesday that balancing the city's upcoming budget will be more than a challenge.

Kier said a lot of budget reductions over the years have left little to no flexibility.

"I can tell you: We will have difficulty balancing out this budget, without a question," Kier said during a council Budget Committee meeting.

Newly elected Mayor Kathy Taylor, who took office Monday, must present a proposed balanced budget to the council by May 1. The council must then approve a budget by June 30.

Last week, former Chief Administrative Officer Sam Roop painted a bleak budget picture during a City Council meeting, warning of serious revenue and expense problems. He said that to balance the budget, either services must be cut or the city must find a new revenue source.

During Tuesday's discussion of the city's five-year financial forecast, Kier was asked whether Roop had exaggerated the situation.

Kier confirmed Roop's assessment, noting that one of the difficulties with balancing the budget is the city's limitation from reductions that have occurred over the years.

"If this was back in 2002, I would say balancing this budget would be a piece of cake," he said.

Although the economy has improved, it has not done so to the point that the city could simply return to the service levels it had in 2001 and 2002, Kier said.

"Here we are (planning for fiscal year) 2007, and we ought to be able to put all those (services) back in place and put compensation where we think it ought to be," he said, "but that's not going to be possible in the short term. You just have to hope things pick up."

Kier said he thinks the opening of the arena and other Vision 2025 projects will help the city's tax base, but he said he doesn't know whether it will be enough to return services and raise employees' salaries to competitive market rates.

"I would be very disappointed if we get in that time period (when the Vision projects open) and we aren't seeing things a little better than they have been," he said.

Councilor Roscoe Turner reiterated his desire to lobby the Legislature to allow municipalities to collect property taxes.

State law allows for city funding to come only from sales taxes.

Turner contends that the sales-tax base will never return to what it once was and that the tax revenue is unreliable.

He also wants to enforce the law against businesses that fail to collect and remit sales taxes.

A report Kier presented on the five-year forecast shows that while the unprecedented decline in the city's general fund from fiscal year 2002 to 2004 has reversed, the original budget for the current year is still $1.4 million less than 2002's.

He predicts that even if sales- and use-tax rates are stable with revenue growth of 2 percent, the city budget for the next few years will still be "very challenging."

Other issues in the general fund include the desire to reach market salary rates for employees and to maintain Police and Fire department staffing levels, as well as increases in health insurance costs.

Some policy issues for the general fund, he said, include the Emergency Medical Services Authority's need for $2.8 million in the upcoming budget and $4 million in subsequent years to maintain the current ambulance service level; and a new accounting requirement to begin reserving for annual retiree health insurance liability starting in fiscal year 2008.

Also, litigation related to the now-defunct Great Plains Airlines and the impact of new tax increment financing on the budget must be considered, Kier said.

He also talked about other budget issues, including water, sewer and storm water drainage, along with needed parking garage improvements and capital improvements. "