City faces $1.8 million budget gap

January 27, 2004|by GREGORY T. SIMMONS

The city of Hagerstown will leave some city positions unfilled and probably will increase fees and delay construction projects to close a gap of more than $1.8 million in next year's budget plan, city officials said Monday.

The city's budget must be balanced when it is passed in late May.

City Finance Director Alfred Martin said a tax rate increase may be needed.

"That's certainly one of the options that may need to be considered," Martin said. "It's very early to be able to say whether we'll have to do that."

For the coming year's budget, officials had predicted a $1.23 million shortfall but Martin said he is expecting an additional $640,000 deficit.


Martin said the additional loss of revenue is attributable to the state's tightening of its gasoline tax distribution.

Hagerstown has used that money in past years to bolster its general fund, which pays for items such as police and fire salaries, the mayor and city council salaries, park maintenance and street cleaning.

"The state is shifting their burden," Martin said, forcing the city to raise taxes or cut services."

Martin said this year's reduction in the gasoline tax transfer would be in addition to last year's $626,840 reduction, which left the transfer at $1,252,000. Altogether, the city faced a $2 million gap last year.

The gasoline tax transfer this year is now expected to total $672,096, just over half the earlier projected amount.

Martin said that before the city looks at increasing its tax rate, managers will look at cost-saving measures in their departments. They will begin submitting departmental budgets in February.

In response to last year's deficit, the city increased property taxes by 1.5 cents per $100 of assessed value. The city also froze five management jobs - two of which remain unfilled - and has kept 12 to 15 nonmanagement jobs vacant since July.

Some construction projects, such as road improvements, were put on hold.

The city also reduced employee incentives for nonunionized workers last year. Those workers did not receive a 2.5 percent cost-of-living adjustment. Their sick leave buy-back options were reduced, and health care for dependents of city retirees was eliminated.

"I think it's going to be about the same as last year," said Mayor William M. Breichner. "It's going to be a very tight year but, traditionally, we're always able to handle it."

Breichner said there are some things that could improve the budget outlook. He said because property values have been increasing, that could translate to an increase in property taxes.

Also, Breichner said the city investment funds - departmental reserves that are held in banks and state investment funds - may bring in more money with the rebounding economy.

However, Martin said the city's investments may not bring in much this year. Any improvement in the investments, which are driven by set interest rates, probably would not be seen until this time next year.

Martin said he had not identified any major sources of revenue that would help the budget situation, at least "not that we're aware of."

The Herald-Mail Articles