Committee reviews city's 2012 budget

Hillsboro Safety and Service Director Richard Giroux and Hillsboro Mayor Drew Hastings presented Hillsboro City Council's finance committee with a balanced budget Wednesday evening.

"You have a balanced budget presented to you tonight," Giroux said to the committee. "The budget is, of course, a draft subject to additional adjustment before council approves it as a final document." 

According to the proposed budget, the "total amount available plus balances" is $5,105,321.35. The total amount of appropriations are $5,101,570, resulting in an ending balance of $3,751.35.

Finance committee chairperson Peter Pence asked Hillsboro Auditor Gary Lewis where that left the city as far as a carryover balance into 2013. Lewis said the carryover is estimated to be between $200,000 to $220,000, depending on whether or not all appropriations are spent. That number does not count the approximately $100,000 that are in contingency funds for emergencies. Lewis said that if those funds are not spent, the projected carryover will be approximately $320,000.

Giroux said that the format in which the budget is being presented is different from previous years. It lists the proposed budget for 2012 next to the numbers actually budgeted from 2012, along with the actual expenditures for 2009, 2010 and 2011. The new format, he said, made it more "user-friendly" and made it easier to compare data. 

"You're getting a good cross-section line item by line item over the last couple years, and you can see right there, easily, the variations of expenses in those line items."

The committee said that they liked the new format, that it was easier to understand and compare numbers, and that they appreciated the work that went into it. 

"I think these guys made it a lot easier format for council to read," Hastings said. 

Council's copies were also color-coded to highlight the line items that were adjusted "in order to meet the need to balance the budget. I went through the budget line item by line item. The majority of the reductions made in order to meet our balancing was by cutting expenses over the proposed budget by using the 2010 and 2011 actual expenditures as a guideline to get an idea of what those operational needs are, to get us through the year with each of those line items. The short version is, the 2012 budget pretty much lines up with most of the 2010, 2011 figures, taking into consideration additional projected costs, based on price of fuel increases and so forth."

Council members asked Giroux and Lewis questions about specific line items and plans for the budget. 

Pence asked Lewis if he was confident the carryover would "give us room for the first couple of months in 2013 to cover our expenses?"

Lewis said, "When it comes to an appropriation budget, the chances of spending 100 percent of everything that is in an appropriation usually doesn't occur. You can probably add on to that $320,000-figure some money that simply isn't going to get spent, and that will increase (the carryover) as well. The benchmark, typically, is the $400,000-mark for a bare minimum carryover. It seems that we're skirting right there. As (Hillsboro City Council President) Lee (Koogler) would say, I am cautiously optimistic. I don't anticipate that we'll have a big issue."

The auditor said that he and Giroux both agree that they do not want to "be doing this, this time next year," and that they want to have the 2013 budget completed in December 2012 and avoid the need for an interim budget.

"Hopefully we'll see a lot more than we anticipate coming in," Lewis said.  

Giroux said a good approach to take when budgeting is to look at the auditor's revenue projections but not to budget that full amount; that way there is a "cushion" because they are theoretical funds and not yet actual funds. Any extra are funds that can be carried over, he said. 

Shoemaker said that council was not "micromanaging, but we're trying to get an understanding here on actual departments and what the final total is. Because once it becomes approved, it becomes your budget to live within."

"I certainly would not expect anything less," Giroux said. "Council, of course, does hold the purse strings, and I know it is very important to be frugal and very concise on what's being done. I do want to assure council too that I have been given instructions from the mayor to pretty much watch the city's budget very much like our own checkbook and make sure that money is being spent frugally, you're getting the maximum amount of return on taxpayer dollars as possible for the benefit of the residents. That's the key issue. Just because we have these monies in the budget, it's not going to be like a teenager with a credit card. We're going to watch these numbers very closely. It is the public's money. It's not ours to just spend." 

Council member Bill Alexander asked if the revenue budget included the city's expectations on the outcome of negotiations with the Hamer, Jackson, Liberty, New Market, Paint and Washington townships, which are currently negotiating for fire and EMS with the city. The city's contract to provide services to the townships initially was to expire on Dec. 31, but council voted Dec. 28 to extend it 60 days. 

Lewis said that there is a line item in the budget that reflects the revenue, but he has "no additional knowledge" on the negotiations.

"This is certainly not for me to brief you on this topic at this point, but I would say that's obviously being looked at," Giroux said. "The numbers have not yet been generated on that."

Alexander said, "That was the area I was most concerned about in terms of looking at the revenue side of the budget, that we would have that locked in when we voted. That's a very considerable portion of our budget." 

"It's a good point," Giroux said. "I certainly would agree with you, and I understand your position on that. It's ours as well. The one thing I can say is that we are going to generate numbers. I am hopeful you will have those numbers as soon as possible. I can say the budget, as it is designed now, for your approval or adjustment, will cover us as far as being status quo at this point. The numbers have not been worked out up or down at this point. If we are continuing as we are doing now, the numbers are in there. Anything that would be an adjustment on the positive side would obviously be a revenue positive." 

Alexander also asked about a section labeled "miscellaneous general government," and particularly in changes made in line items "rents and leases, economic development, capital equipment and professional services." Alexander said that changes in those items, "that has increased the total from ($882,797) to ($955,328). Does that increase the total budget, or is this offset in other places in the budget?"

The increases included $45,000 added to economic development.

Giroux said those figures do not add to the overall total and that they have been offset by other cuts. 

"That looks like about $70,000," Alexander said. "In what parts of the budget has that been offset?"

Giroux said that they were "probably scooped off the generic adjustments over the total budget, rather than offset by a particular sub-budget or line item. When the auditor gave me the original budget that we were looking at, we were about in the $550,000 range in the red."

After the first round of cutting, Giroux said he cut approximately $675,000, leaving him with approximately $125,000 "in the black" from where he had "cut too deeply."

"I re-inserted that into certain line items the mayor felt was appropriate, in order to work on the agenda," Giroux said. "One of the issues, of course, was the $45,000 for economic development endeavors that the mayor wishes to pursue and various other expenditures associated with that." 

Council member Dave Shoemaker said that there was concern regarding how the 2011 budget would turn out, and comparing the 2011 actual expenses to the 2012 budget, "we're seeing several departments with a plus. How do you anticipate the revenue to keep up with that?" 

Giroux said that when designing a budget, he has to rely heavily on the auditor and the city's history for accuracy in projecting the revenue. 

"In every government ... they're best-guessed estimates based on what's likely to happen," Giroux said. "Whether or not those revenues actually materialize or not is depending on whether people pay their taxes, and property taxes and all the fees. Based on what Gary had provided, looking at past numbers, I think they're pretty solid numbers." 

Lewis said that based on projections in 2011, "I wasn't too excited about 2012," but the city was fortunate in some uncontrollable areas of revenue. Ambulance service collections were estimated to be approximately $450,000, but the city actually collected $503,000. Estate taxes were estimated to be around $50,000 but ended up bringing in close to $150,000.

• In the miscellaneous general government fund in the professional services line item, Giroux said he added $20,000 to the fund - taking it from $55,000 to $75,000 - "at the recommendation of the Assistant Law Director (Laura Curliss) for consultant fees."

Curliss specified that the fees were not for her, and Giroux clarified that they were "in case we needed to consult on various issues, that she would recommend." 

• The city is also looking into lease-to-own options for police cruisers, which allowed them to cut in the line item budgeted for vehicle repairs, Giroux said.  

• Alexander noted that overtime in the fire department was $118,297 in 2011 and $314,000 in the 2012 proposed budget. That figure was $99,000 in the budget currently being presented. Lewis said that the budget was submitted in June, and he suspects that he misread something or there was a typo because that figure is not consistent with department history. 

At the end of the regular meeting, Giroux said that he anticipated having a budget presented to the full council during the Feb. 13 meeting. Pence said they may schedule a finance committee just before the full council meeting to go over any changes. 

After regular business was concluded, Laura Curliss said, "I'd like to request, as your deputy law director, that you go into executive session so I can give you some attorney-client privileged information." 

In addition to the council members, Hastings, Lewis, Giroux and Curliss were asked into the executive session. Hastings requested the committee allow Sam Stratman into the session because "he has been involved with this all along." 

The committee met for more than an hour in executive session, and when they entered back into regular session, there were no actions other than adjournment. 

Curliss told the Highland County Press that Hillsboro Law Director Fred Beery said that he had entered into executive session before citing attorney-client privilege as the reason, and that she has as well, in other municipalities where she is law director.