Victoria City Council supports sales tax plan
March 16, 2010 at 10:02 p.m.
Updated March 15, 2010 at 10:16 p.m.
A staff plan to prepare for up to a $2.6 million shortfall in sales tax income for Victoria's budget appeared Tuesday to have the city council's support.
That support came despite a blast from Jeff Williams, a businessman and council candidate, who said he warned the council last summer of the potential problem.
"Looking back, we were optimistic with our predictions of the sales tax," City Manager Charles Windwehen told the council. "But it's very easy to Monday morning quarterback anything."
The current $144 million budget that took effect Oct. 1 projected $13.69 million in sales tax income, making it the largest general fund income producer. The property tax was projected to be the second-largest money producer, bring in $12.86 million.
Based on current trends, it appears the projected sales tax income could fall short by up to $2.6 million, unless there's a significant change in the economy.
"This is not good news," Mayor Will Armstrong said. "But it is not a situation where we have to go around looking up in the sky and say the sky is falling."
He said the economy in Victoria remains vibrant.
Williams, who is running for the Super District 6 council seat, said he warned the council last summer when it was working on the budget that the economy was in trouble.
"Where have you people been?" he asked. "The citizens of Victoria are tired of the games being played with them."
He said there was every indication that the sales tax income would drop in the current economy, but the council chose to adopt a budget projecting a 2-percent increase. "I for one would like you to be honest with the public."
Windwehen said he told the council when it adopted the budget in September that the staff would continue to monitor and manage the budget. He said it has done so starting in November, making about $1.5 million in cuts so far.
He said he's prepared to make another $1 million or more in cuts to ensure the city ends the fiscal year in the black.
Windwehen said in a memo to the council that steps have already been taken to deal with the loss. It also notes more may be possible.
A total of 11 openings have been frozen and one has been eliminated. Other steps include:
A $260,000 freeze on street department spending for maintenance. That's how much bids came in under budget.
A $455,000 freeze on equipment and building renovation projects in the police and fire departments.
Requiring the street department to purchase different equipment to repair potholes, saving $72,000.
Freezes in various accounts in all general fund departments.
The staff memo from Windwehen also states that plans are being made to deal with next year's budget.
Among the possibilities are natural attrition and giving employees as much notice as possible if their jobs are being eliminated.
Also included are a budget year with no new programs, no new positions and, most likely, no pay raises.
The group health plan program and employee retirement program would not be reduced, but the group life insurance program provided by the city would probably be discontinued.
There could be between 15 and 20 positions affected by program cuts.