Kanab City Manager Duane Huffman presented Mayor Nina Laycook and the city council a tentative city budget for fiscal year (FY) 2010/2011 at the May 26 Kanab City Council meeting. The newly-hired Huffman outlined several proposed budget cuts and potential ways to increase revenue in a presentation that generated a number of questions from the council and some from the few citizens present. He stressed this is a tentative budget and additional input and information will be sought and incorporated into the final proposal before the city council considers it’s adoption at a later date.

Huffman stated in his presentation that city revenues bottomed out in FY 2009/2010, largely secondary to the general economic downturn, with only slow growth expected in the next fiscal year. Total General Fund revenue is down 37% since FY 2006/07 and sales tax revenue has declined the last four years. There have been no city tax rate increases during that time. General Fund expenditures were down 26% since FY 2006/07, but still exceeded revenue. In FY 2008/09, expenditures exceeded revenues by $670,000, largely secondary to the costs associated with the new swimming pool.

“There is a potential swing in next year’s budget of $400,000 with the possibility of ending up in the black by $300,000 if new revenues are generated and budget cuts are incorporated, or $100,000 more in the red if these proposals are not carried out,” said Huffman.

His recommendations for increasing revenue include an additional 1% tax on motel room and RV camp stays of less than 30 days (transient room tax), and a 3% tax on municipal energy sources like electricity and propane that would start October 1. Increasing fees for business licenses and for swimming pool use, as well as charging for patrons using the computers at the library, are other options for generating revenue.

Cutting expenditures presented the council with even greater challenges. Huffman offered these possibilities: a hiring freeze, wage and salary freezes, having employees pay a percentage of their health benefit costs, a reduction of pay for or the number of part-time employees of 20%.

He would like to see all city departments decrease their operational costs across the board by these amounts: travel-70%, office supplies-25%, maintenance and equipment-20%, memberships/subscriptions-20%, automotive-10% and utilities-5%. These category cuts could be manipulated by the department managers as their needs dictated to achieve the overall total percentage reduction by that department. There would also be a one-year deferral of funds for non-committed or non-essential capital projects.

Donations to some special activities in the city would end. A freeze on recreational expenditures, other than the pool, and a transfer of operating costs, not covered by fees, to the Recreation Fund.

Not forgotten was the reinstatement of impact fees, which have been suspended for the last year.

“I would like to see an overall reduction in expenditures of 9% from the original FY 2009/10 budget,” emphasized Huffman.

Police Chief Tom Cram voiced concern about the impact of budget cuts on his department saying, “I have returned 10% and 7% of the police department’s budget to the General Fund the past two years, and now you want me to take a 9% cut? I have two officers who have worked hard to qualify for Patrolman II status that would be denied a merit pay increase with the wage freeze. I’m also disturbed about the automobile and travel expense cuts.”

It was later explained to Cram that his department’s cuts would likely be in the 2% range, which he said he could live with.

Councilman Tony Chatterley campaigned for funding for a full-time, paid fire chief in the person of volunteer Fire Chief Joe Decker, which was also endorsed by Mayor Laycook. The problem remains finding money in the budget for his salary and benefits. Generating fees from fire code inspections and the like would take time and necessitate finding other ways to fund the position. All agreed a full-time fire chief is needed for the demands of the job and to keep fire insurance rates for everyone as low as possible by meeting certain standards for safety.

Parks and Recreation department overseer Councilman Shaun Smith objected to a 54% cut in his budget. Essentially, only the swimming pool would be funded and other areas decreased or frozen. Councilman Ed Meyer clarified Smith’s impression by saying only the recreation fund would suffer that large a cut and his general fund monies would be at the 9% level, greatly lessening the impact.

Councilman Jim Sorenson stated, “We’re missing the point here. We have a budget deficit to begin with and are facing major expenditures for the KCR bridge, airport and water fund payments. I sympathize with funding these other needs, but we have to balance the budget. I’m not comfortable adding a 3% energy tax onto our citizens and freezing personnel wages, yet wanting to find ways to pay for new expenses.”

Ed Meyer agreed with Sorenson, adding that city employees health care benefits are fully paid for and that with the ever-increasing premium costs, some of this expense may need to be passed on to the employees.

There was also discussion about transferring some of the $300,000 surplus in the Water and Sewer Fund to the General Fund to help cover expenses. This money would not have to be earmarked for specific uses in the General Fund, but may be lost to the Water and Sewer Fund for later projects. “More research will be done before this is considered,” stated Mayor Laycook.

Former Mayor Kim Lawson asked the council to remember the city manager works for the council and does not set the budget. “Council members must request funding for their needs and the city manager must ask for more information on these requests. The city council approves the final budget,” he said.

Lawson also acknowledged that the General Fund balance was not in accordance with the state’s recommendations his past two years in office, as he felt the city’s needs took priority.

Huffman said he has had meetings with the individual council members during this budget process and there will be more as the budget moves toward a final resolution. In a phone conversation a day after the meeting, I asked him if he knew what he was getting into when he took the city manager position three months ago and he said, “I certainly did and I welcomed the challenge or I wouldn’t be here.”

In other council action, Resolution 5-4-10R was passed specifying a new charge for the use of credit cards in paying city bills online or by phone of $3.00/transaction in addition to the $1.00 phone-in fee presently in effect. This will take place starting June 1.

Oran Stovall was approved to begin a six-month probationary status as a volunteer fireman on the recommendation of Fire Chief Decker.