THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, January 26, 1995 TAG: 9501260383
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY TONI WHITT, STAFF WRITER
DATELINE: PORTSMOUTH LENGTH: Medium: 63 lines
Despite layoffs and budget cuts last summer, the city is still struggling with its finances.
Johnna Whitaker, the city's chief financial officer, has frozen $1.4 million in department budgets and has asked each department to reduce its budget by 6 percent next year. She also said the city has been forced to use nearly $500,000 of its reserves to meet operating expenses.
Department heads will be able to decide how they make up for the frozen funds.
City officials overestimated revenues when they prepared the budget last year, Whitaker said. Whitaker, who took the helm of the city's finance department four months ago, said she projects that the city's property tax and sales tax revenues will fall short of the estimates on which the budget is based.
She also said money from Willett Hall, Circuit Court fees and Sleepy Hole Golf Course, Bide-A-Wee Golf Course and other recreational facilities also is running about $1 million under what was estimated. They typically earn about $9 million, she said.
``The most positive thing about this is that we've recognized we have problems and we're working proactively to solve them and put the city on a better financial footing,'' Whitaker said. ``We think our revenue estimates haven't been too conservative.''
Whitaker said she asked for cuts in the coming budgets to pay, in part, for increases in the city's construction debt. She has also recommended that the City Council scale back its building budget from $10 million, which it has approved in recent years, to $8 million for next year.
Five years ago, the city was borrowing money to meet day-to-day expenses. The financial reserve fund - normally used to bridge the tight times in a year - had been tapped so often that only $4 million was left.
The city's reserves are important because independent financial analysts use the reserves as a measure of a city's well-being and as a factor in determining bond ratings. The better a city's rating, the lower the interest rates when a city borrows money for projects.
The city's municipal finance commission recommended that Portsmouth keep $11 million in its reserves. Portsmouth had built its reserve back up to $7.3 million last year, but it has dropped to $6.8 million in recent months.
Whitaker said that, by catching these problems now and asking each department to ``curb spending,'' she hopes to be able to add to the fund at the end of the year.
To trim their budgets, department heads might cut goods or services, or delay filling vacancies, Whitaker said.
The amounts frozen vary, depending on a department's size and budget, Whitaker said.
``Some departments have to cut $500,'' she said. ``Others may have to cut $60,000 or $70,000.''
For instance, the city manager's office has been asked to set aside $1,200; personnel, $6,000; the public library, $11,000; and maintenance for parks and recreation, $44,000.
KEYWORDS: BUDGET BUDGET CUTS by CNB