The City of Perry faces a sure drop in tax revenues next year as the annual budgeting process shifts into high gear this week, with the heads of the 10 departments of city services submitting their funding requests for review by City Administrator Butch Niebuhr and City Finance Officer Susie Moorhead.
The Perry City Council will take up the Fiscal Year 2015 budget at a series of meetings, working sessions and public hearings over the next six weeks as the March 15 deadline approaches for submitting the council-approved budget to state and county auditors.
The drop in revenues follows a reduction in the assessed value of commercial property in Perry, Niebuhr said. "(Dallas County Assessor Steve C.) Helm lowered commercial property values in Perry across the board," he said, "and the county notified Perry that property tax collections will be about $75,000 less than last year."
Moorhead said the value of commercial property in Perry dropped from $145 million in the 2014 budget to $136 million for the next fiscal year, which starts July 1.
Lower property values means lower tax revenues, so the city faces a corresponding drop from $1.179 million to $1.104 million in collected taxes.
"The state will backfill about a third of the loss," Moorhead said, "but it still leaves us with $52,350 less than last year."
That might not sound like a lot in a $9.2 million city budget but after operating for several years running on a starvation diet, most departments have little fat left to cut.
Moorhead noted the waste water treatment center has cut its full-time staff from three persons to two, the parks and cemetery departments each have just one full-time worker and the part-time city hall worker was laid off.
The City of Perry currently employs about 55 full-time workers in ten departments: police, fire, street, airport, garbage/recycling, library, parks, recreation, cemetery and administration. When part-time employees are added, such as the city council and volunteer firefighters, the total is about 120.
When revenues fall short, a city must decide whether to cut services, raise fees for services or both. There is also a sometimes frantic search for new revenue sources and a greater strictness in the efficient use of resources..
Perry’s recycling program, for instance, will come in for special scrutiny this year, Niebuhr said.
"A bundle of white paper used to fetch $2,000 to $4,000," he said. "Now it gets about $200. We’re losing tens of thousands in funds on the sale of our recycling products."
There appear to be two options, Niebuhr said. "We can either back off on our service and reduce collection, or we can farm it out to outsiders," he said.
Each of these options presents difficulties, but they illustrate the tough choices city leadership will face in the coming weeks of budget negotiations.