PORTERDALE - Raise taxes or cut expenditures - those are the two options presented to City Council members at a work session on Tuesday night by City Manager Tom Fox.
Fox told council members that the city's General Fund revenue for 2009 is approximately $108,000 short of planned expenditures for the coming year, after calculating in some anticipated savings in wages and legal fees. The general fund, budgeted at $1.1 million, includes the Porterdale Police Department, city administration and public works.
Fox had a similar message for City Council members last fall when it appeared that the city would face a $200,000 budget shortfall for 2009. The city was able to close that gap with the sale of its reserve sewage treatment capacity to the Newton County Water and Sewerage Authority. That sale netted about $208,000 and helped Porterdale balance its current budget; however, Fox told council members in February that the sale was a one-time opportunity that would not be available to help make ends meet in 2010.
That cautionary note rang true Tuesday night when Fox told council members they would have to make some tough decisions in the days ahead. Fox said that the city needs to set its millage rate in early September so property tax bills can be mailed. Taxes are due in December.
Porterdale's current millage for maintenance and operations is 8.764. Fox said in order to close the budget gap with a tax increase alone, the city would need to set a millage rate of 14.26 mills. That, he said, would translate into a tax bill of about $570 for the owner of a $100,000 home, a $220 increase over the current rate.
Porterdale's net tax digest is $27.2 million and shows a slight increase over the prior year, Fox said. However, other revenues have decreased, including local option sales taxes, which are down by about $37,000.
Fox said that the city's general fund is designed to be supported by fees, fines, forfeitures, local option sales taxes, and property taxes. In the past, he said, when these revenue sources weren't sufficient, the city has been able to transfer funds from the Water and Sewer Fund to the general fund in order to balance the budget without a millage increase. This year, however, Fox said he anticipates no extra revenue in the Water and Sewer Fund, despite a recent rate increase.
Unlike cities with healthy reserve fund balances, Porterdale has no overlap of funding from year to year.
"Since we don't really have enough reserve fund to carry us through the year, we depend on those taxes we collect in December to make it through the following year," Fox said Wednesday. "The millage rate (set in September) will be for 2009, but that funding will actually fund 2010."
According to Porterdale's 2008 audit, the city's reserve fund balance for the general fund decreased to about $45,000, down from $286,223 the prior year. The audit attributed that decrease in large part to the economy, stating that the city "had no choice" but to "use prior year funds for operating expenses."