THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Wednesday, February 12, 1997 TAG: 9702120462
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MAC DANIEL, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: 67 lines
First came the good news - city officials have found millions that could be used to offset the projected $14 million shortfall in this year's capital and operating budgets.
But this news was quickly followed by the bad. The $14 million projected shortfall is actually $19 million. And even that figure is predicted to grow larger as the city begins to face major costs not reflected in the proposed capital and operating budgets.
And the kicker: City revenues are predicted to decrease in the next several years.
``All I can say,'' said Mayor William E. Ward, ``is `Umph!' ''.
At a work session Tuesday, members of the Chesapeake City Council were shocked when they were told the city's projected shortfall had grown.
City Manager John L. Pazour said the gap hadn't really increased.
When former Budget Director Claude Wright revealed the figures to council, he assumed that a $5 million shortfall in the second year would be wiped out when the $5 million shortfall in the first year was eliminated, Pazour explained. That was not correct, Pazour said.
``It was assumed that once you solved the original $5 million shortfall, the other would be solved as well,'' said Pazour. ``That's how it was presented.''
Wright retired from his position as budget director in the midst of crunching numbers for the capital budget last month. Pazour had said Wright had long expressed an interest in retiring this year.
City officials have found more than $1.63 million in unallocated stormwater funds, a $2.02 million surplus from existing public works projects, and $31.6 million in uncommitted funds.
Some of the public works funds can only go toward funding certain projects. The stormwater money can be used only for stormwater maintenance, and the $31.6 million reserve should really be kept intact for future needs, Pazour said.
There is also some uncertainty about revenues in the next three years. Pazour said the city is expecting $1.6 million less in city revenue than what was budgeted in 1997; $400,000 less than budgeted in 1998 and $3.1 million over the budgeted amount in 1999.
In the end, Pazour recommended that the council increase the local 911-emergency telephone fee and use the money to fund a new city emergency radio system.
In addition, Pazour has recommended that the council approve the capital budget and deal with the shortfalls when they consider the operating budget in the next two months.
Part of the problem is the lack of tax revenue in Chesapeake, according to Ward, who read a list of tax increases and budget-funding increases over the past several years. In all, Ward said, the city had approved $200 million in projects with only a 9-cent tax rate increase. ``And I guess that's part of where we are today,'' he said.
The council is scheduled to adopt the proposed $564 million capital budget in two weeks.
The shortfall stems from the capital budget but really affects the city's operating funds.
When the city builds new projects, the money to operate and maintain them comes out of its operating budget.
Wright had suggested an array of various fee and tax increases to make up the gap, including an increase in the local cigarette tax, creating a cable television fee and increasing fees for emergency medical service.
The council will hold an extended work session Tuesday at 4 p.m. to discuss the capital budget. The meeting will be held in the fourth-floor training room in City Hall.
KEYWORDS: CHESAPEAKE CITY COUNCIL BUDGET