Whether an individual, small business, corporation or governmental entity, the bottom line is important. Town Manager
Mark Stevens presented to Town Council on April 22 a new financial model and business plan that will establish a better balance between revenue and expenditures for the Development Services Enterprise Fund.
Town Council unanimously approved the plan.
"This plan will place the Development Services Enterprise (DSE) Fund on a stronger and more consistent financial basis, maintain a reasonable level of service and continue to protect public health and safety," said Town Manager Mark Stevens.
In 2005 when the Town saw 1,532 new single-family housing permits and the resulting $6.2 million in revenue to the Development Services Enterprise fund, those in planning, permitting and inspections worked hard to keep up with the brisk pace and more staff was hired to handle the burst of growth.
Now, three years later, with only 275 new single-family housing permits estimated for this year (the lowest since 1992) and a resulting $2.3 million in revenue, the Town no longer can afford the higher level of expenditures.
"We think prudent use of the reserves, replenishing them in good years, drawing upon them in low years, balancing in average years is a business plan that makes sense," Stevens said.
Instead of staffing and other expenditures based on the boom years of a few years ago, the new business plan calls for staff and expenditures at a moderate-growth level, about 600 new single-family permits - or about $3 million. The DSE budget in 2008 is $4.4 million and the costs incurred in 2007 was $4.3 million, but cost reductions need to be found to reduce both years' costs to about $3 million.
To help slow the financial bleeding, Council approved using $1.1 million in reserves, but more is required to achieve financial equilibrium. In addition to reserves, current staff had to be analyzed. At the start of 2007, there were 52.68 full-time equivalent (FTE) positions.
The new plan reduces the number of FTE by 42 percent, to 30.70 FTE. Attrition has reduced the number of employees, but does not completely reach the 30.70 FTE target, forcing the Town to also lay off our personnel whose salaries are funded by DSE.
"These aren't easy decisions to make, but the Town finds itself in the same position as many businesses throughout the area. Revenues simply are not coming in to justify expenditures, including personnel," Stevens said.
In addition to the housing downturn, sales tax revenue to the Town has increased, year-to-date, only 2 percent over 2007. Sales tax is the Town's primary tax revenue source, so the growth in revenue is not keeping up with inflation and the Town's cost to conduct business.
Other means being implemented to reduce costs throughout Town:
- Reducing the use of consultants
- Reallocating some costs charged to DSE to the General Fund, Utilities Fund and Transportation Funds
- Restrictions on out-of-state travel and training for employees
- Evaluating positions when they become open
- Eliminating authorized positions through attrition
- Freezing materials and supplies budget lines
- Deferring various water, sewer, storm water, street, park and facilities projects
- All departments are being asked to use best business judgment to reduce costs
"We have 18 different Town funds with different sources of revenue and different legally allowed uses of funds in different states of financial condition," Stevens said adding, "Balancing all of the needs and priorities is no easy task. We are actively managing our financial situation, and we will continue to do so."