MOUNT VERNON — A financial snapshot of the city’s fiscal health shows that although some revenue is declining, the city is nowhere near being on life support.
City Auditor Terry Scott updated council members on the city’s financial position through July 31, targeting three areas the city needs to track: Revenue from city income tax collections; money received as local government funds; and money derived from the state gasoline tax and motor vehicle licenses.
“Seventy to 75 percent of the revenue in our general fund is derived from city income tax,” said Scott. “Through July 31, information from the tax office, year to date, showed revenue down $600,000. It had been running around $300,000, but at the end of July it spiked to $600,000.”
A measure of that was a timing issue, he said, with some revenue being credited the next day. When looking at August 2008 figures, the city collected $600,000; in comparison, Aug. 1 through Aug. 18, 2009, the city collected slightly over $800,000.
Scott said that thus far, however, despite the higher unemployment in the county, the majority of the decline in income tax collection is coming from businesses rather than individuals.
“Employers are willing to take a hit in order to keep people employed,” he said. “We are seeing it on the business side, not yet on the withholding side.”
The local government tax comes from the state, said Scott. In January, he was told to plan on a 7 percent reduction, about $27,000, in this fund. In July, the state budget commission lowered that estimate, and told him to project an additional decline of 8 percent.
“That’s $30,000 in addition, so that brings us to $57,000 they are telling us we should plan for a reduction,” said Scott.
The third area placed on Scott’s watch list is that of money received from the gasoline tax and license fees, which will affect the city’s street department.
“As less fuel is being consumed and as we continue to work on alternative fuels, I think we will see this continue to decline,” he said. “Be aware, though, that not all of our money for the street department comes from tax revenue.”
On the expense side, the city is under its projected expenses through July 31.
Scott said that in April, the administration met with department heads and asked them to look at areas where costs could be cut or contained.
“Our focus is to try and establish a reasonable carryover to 2010,” said Scott. “Our overall expenses are all under what we would consider to be the maximum [that could be spent.] We feel if we can continue to work toward that goal by the end of the year and keep expenses intact, we will be able to have a carryover to 2010.”
Scott said $10 million in income tax was collected in 2008.
“We will be hard pressed to get to $9.5 million [this year],” he said. “I set the budget at $9 million. So you can see why we are trying to put a hold on expenses ... and that is just to keep the same level of services.
“Is the sky falling?” he asked. “We are certainly not in that position at all. We are certainly not in a position of staff reduction or furloughs.
“The administration and I have been working on this since way back in April when we began seeing what was happening,” said Scott. “We are not in the same shape as the county.”