As Berea City Administrator David Gregory presented the 2021 fiscal year budget to the council, he told them this year would be different in many ways.
The first, and largest, was announcing a projected $2.7 million in revenue shortfalls for the upcoming year, as a result of the coronavirus pandemic.
Additionally, in previous budget practices, those who draft it would underestimate revenue and overestimate expenses while opening strictly on cash flow, Gregory said.
“That has worked for many years, and we have built a strong reserve as a result,” he said.
But with times the way they are, the city’s 2021 fiscal year budget would be more focused on accuracy and estimations of revenue and expenses. Many of the numbers presented and proposed, followed a theme of being closer to the 2018-2019 fiscal year actuals.
“This revenue budget is exactly what we are expecting to come in, but really it is still unknown,” he said. “...We have budgeted based on minimums and understand that sacrifices will be made.”
Gregory told the council when they met in March, before the shutdowns, the city was still projecting $12 million in revenues. But now, two months in the thick of one, the city is projecting a revenue shortfall of over $2 million.
“The financial condition is much more dire,” Gregory said. “While we are hopeful that things will rebound quickly there is no promise...There is no historical data to lean on cause this event is unprecedented.”
Council member Steve Caudill, who is also the head of the Audit and Finance Committee, said before going through the budget that when the members got the bottom line item, that was the bottom line.
“That is what we think is actually going to be in there as we go through the year. There are no projects that we hope to have, it is bare minimums,” Caudill said. “This could all turn around and life could be much better, but at this point, that is where we are at.”
Just into the third page, council member Jerry Little said he had a problem with the budget as it was proposed to remove $1.3 million from the “rainy day fund” when there was still left over money in the general fund to help recoup losses.
“If you were teaching your child a budget on money management, how would you explain using your restricted savings funds when you have money in the bank?” He asked. “If we didn't have any money I would be all for going into the rainy day fund, but if we have money, why in the world would we go into the rainy day fund when we have money?”
Council members Cora Jane Wilson, Emily LaDouceur and Ronnie Terrill all agreed with Little.
Caudill attempted to explain that the money is all from the same pot, but that funds have been put in other locations and can be allocated as they choose.
“I understand that,” said Wilson. “But why are we taking it out of fund balance reserves? We have not been hit hard, so why are we taking money out of here that we have never touched for years to put it in there when there is actually -- you still have a positive balance. I understand what you are saying for the accounting view but you aren’t going to overdraw.”
“We are,” Caudill said point-blank. “We are going to overdraw. If nothing changes, if we don't see an increase in revenue as we come out of this, we are going to spend more as a city than we bring in.”
He warned the council they would have to prepare for five or six budget amendments to do throughout the year to accommodate for things wrong.
“If things go well and we see that we are getting more occupational license fees and net profits we are going to be able to not spend this money but this is a bare boned budget that has a lot of things taken out of it,” said Caudill.
But member Little was still not for it.
“We have got the money to pass a balanced budget, we have got money left over and add that to what you have got and that is what you have got,” he said. “Now heck with it.”
LaDouceur and Terrill presented the idea to balance the budget without using the rainy day fund, and if they have to amend it down the road, so be it.
“It is the rainy day fund for a reason and I would agree this is kind of a rainy day, let's not lie,” she said, “But I don’t think we are to that level yet, it doesn't seem like we are to that level of emergency just yet.”
“I don't want to use the rainy day fund unless we absolutely have to use it,” Little said.
The Audit and Finance Committee voted to transfer funds from the fund balance reserves as opposed to the rainy day fund.
• Member Ronnie Terrill requested that $5,000 be removed from the Mayor’s Contingency Fund for temporary fencing for a dog park to be transferred to the parks department budget. It was marked as “Land Improvement.”
The first reading of the budget will be presented before the council in two weeks on June 2 at 6:30 p.m.
Those in the public wishing to comment on the proposed budget can do so by visiting bereaky.gov.
Reach Taylor Six at 624-6623 or follow her on Twitter at @TaylorSixRR.