While the battle of the fiscal year 2014 operating budget is now concluded, it does not mean the city of Fort Smith's finance department can sit back and relax.
The department is looking to next year and beyond in an effort to improve communications with the Board of Directors, which should better prepare them for the FY2015 budgeting process at this time next year, according to Director of Finance Kara Bushkuhl.
"(We) will go to the Board early in March to give them an overview of where we are in 2014. (It will) only (be) for two months, so it won't give us much information."
City Administrator Ray Gosack said presenting information more regularly to the Board could allow members of the Board to indicate early in the year if they would like to make a shift in fiscal policy, such as increasing the amount of funding the city places in reserve, set at 7.5% of the total budget, and using those reserve funds to balance the next year's budget.
"(We'll) have discussions with the Board of Directors about a fund balance policy and our past practice of using prior year's balances to help balance the next year's budget and see if the Board wants to change that philosophy or modify it."
As for more cost cutting measures to be taken during the upcoming year, Gosack does not see a real way to reduce expenditures enough to not rely on the end of year balance to pad the next year's budget, explaining that "we've been cutting for five years."
And even though he is fairly certain the city has cut to the bone, he has not stopped looking for ways to save money, a move that will continue next year as the city begins work on the 2015 general fund budget.
"We're always looking for better ways of providing services, more economical and efficient ways of providing services. And we're also looking to identify services that perhaps citizens don't value any more," Gosack said. "I'm sure there's services we provide that we've been doing for years and years that a Board member or a citizen 25 years ago asked for it and we keep doing it. And so I've challenged employees at all levels in the organization to help us identify those things that we may be doing that citizens don't really expect or value."
A potential issue already on the city's mind is the development of a 70-store shopping center in Barling, near the intersection of Arkansas Highways 22, 59 and the future Interstate 49, Bushkuhl said. Such a store could reduce sales tax collections for Fort Smith.
"We know that's out there and it's a possibility. But because we have no estimates or anything, we don't know if there's going to be some Fort Smith stores transferring out there. We don't know what the impact is and until I get this new information from the state on commodities and things - we're supposed to get some better information on sales tax numbers. We haven't gotten one yet. We'll get one in January. But maybe we'll have a little better idea," she said. "And since we don't know what's going out there, it's kind of hard to estimate that. But we do have it in the back of our minds. We know it's there and it's a possibility that some monies could be transferred and we could only get the county sales tax and not all of the sales tax."
Gosack elaborated, sayingthe city would still receive county-wide sales tax collected at the shopping center which would benefit public safety and the general fund. But other city services could be impacted by the new development and the loss of revenues in Fort Smith.
"It can impact those sales taxes and it would impact the street sales tax, as well, because that is a city-wide sales tax. But the main sales tax in our general fund is a county-wide sales tax, so as long as the retail activity is occurring in Sebastian County, we benefit from it regardless of where in the county the retail activity occurs."
One thing the city is trying to avoid when it comes to stabilizing the city's budget situation is any increase in taxes, according to Gosack.
"You know, increasing revenues is one option. The most desirable way to increase revenues is through economic growth and letting the economy grow our revenues. But so far, the economy has been very sluggish and slow to recover, so we've not seen the normal economic growth we would expect. You know, I think the Board's going to be very careful about increasing tax rates or fees to generate additional revenue because of the impact that can have on the economy."
Even if the regional economy shows a slight uptick, Gosack said the city would likely be in the same shape when the hard work begins on the FY2015 budget in mid-2014.
"Yeah, I mean it's hard to predict revenues two years from now. But the growth so far has been slow, so there's no reason to think 2015 is all the sudden going to become a bumper crop."
Bushkuhl said as tough as this year's budgeting process was with so much back and fourth from the Board, the process resulted in a greater understanding of the budgeting process that will serve the public well as preparations for FY2015 get underway.
"I understand that it's not an easy process and for people who are used to what I say normal accounting versus governmental accounting, I think that it's a little difficult for them to get a grasp on it. But I think they're just doing their job and they just want to make certain that we have enough money to cover our core services and anything above that, they want to be very careful with how much, how far out that we go."