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Budget problems looming for Kingman


Recession's toll continues to be felt

KINGMAN - The city of Kingman will survive fiscal year 2012-2013 ending June 30, but its budget is headed for a crash in 2014.

So said Finance Director Coral Loyd at Tuesday's City Council meeting during a report on the city's second quarter financial situation.

"We did cut the budget to set up for a soft landing," she said.

Sales tax revenue is flat, the pools and parks department is bleeding red and the court system and planning and zoning department are in trouble.

Loyd's report provided a snapshot of the city's bleak financial situation in advance of a meeting today to discuss Kingman's capital improvements plan for 2014 through 2018.

Sales tax revenue for the last six months of 2012 was roughly $5.3 million, putting it on pace to match 2011 and 2012 totals of about $10.5 million, but about $1 million less than what was collected in 2009 and 2010 and $2 million less than in 2008.

The retail industry provides the bulk of sales tax revenue, about 47 percent or $2.9 million. The figure is roughly $100,000 more than what was collected in 2011.

Restaurants and bars chipped in the next highest total at 18.3 percent or $1.1 million. Hotels and other lodging sales tax contributed about $564,000, down nearly 7 percent from the prior year.

Transportation, communications and utilities came in at about $284,000, down a whopping 24.4 percent from the prior year.

Construction pitched in about $344,000, another nearly 7 percent drop.

Finance, insurance and real estate contributed $291,000. Wholesale trade came in with $215,000, about 4 percent less than in 2011.

On the upside, sales taxes generated by bars and restaurants were up more than 87 percent following a tax hike last year.

General fund revenues of about $22 million and expenses of $21.5 million leave a surplus of roughly $500,000. The figure is down about $600,000 from last year, but slightly up from 2011.

The city enjoyed surpluses ranging from $1.4 million in 2010 to $1.7 million in 2008, said Loyd.

Pools and parks took a huge chunk of revenue. Between July and December, the city collected about $53,000 in pools and park fees with operating expenses of roughly $960,000, leaving a $907,500 deficit.

The recreation department is also bleeding, but it's not hemorrhaging like pools and parks. About $73,000 was collected in fees with operating expenses of $221,200, leaving a deficit of roughly $148,000.

The golf course lost about $51,000, which is good news compared to previous years when it operated at deficits ranging from $77,400 in 2011 to about $132,000 in 2010.

Another money pit is the city's municipal court system. Fines paid the last six months totaled about $133,000 compared to operating expenses of more than $575,000, leaving a deficit of roughly $442,000.

The Planning and Zoning Department has seen its revenue shrink since the Great Recession hit. Over the last six months of 2012, the department collected $2,100 in fees compared with expenses of about $243,400. Planning and Zoning is in the red about $241,300.

The department has not come close to breaking even over the past four years, noted Loyd. In fiscal year 2009-2010, for example, $12,500 was collected in fees, but operating expenses were more than $308,000.

Building inspections yielded $165,000 in fees compared to operating expenses of about $280,000 - a deficit of about $116,000.

Like planning and zoning, the city managed to cut costs and lower the deficit for building inspections over the past four years.

The Highway User Revenue Fund collected a total of $1.3 million with operating expenses of about $1.5 million, leading to a deficit of nearly $200,000.

The KART bus system lost about $147,000 following revenues of $223,600 and expenses of $370,000 the first six months of 2012-13.

The city's water operating fund was a rare bright spot in Loyd's report, with revenues of about $4.3 million and expenses of about $3.2 million, leaving a balance of more than $1 million.

The sewer fund is also in good shape, with revenues of $3.4 million and expenses of about $2.5 million over the first six months of the fiscal year, leaving a balance of more than $888,000.

It's worth noting the steep increase in sewer costs levied against users added about $700,000 to the fund over fiscal year 2011-12.

"Next year, we could be in trouble," said Loyd. "Everything continues to be more challenging."

Those challenges, she said, could compel the City Council to either cut services or raise taxes - with no wiggle room in between.





 

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