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Show Deficit Could Reach $250,000; Herb Johnson Laid Off City Wrestles With Potential Budget Shortfall Residents attending Thursday's Thurs-day's public hearing on a proposed beer tax for Park City were told the city could possibly be faced with a $240,000 budget deficit by the end of this fiscal period. City Manager Arlene Loble said the possible deficit is justification for the tax, saying the city must either find alternative revenue sources, or reduce the level of municipal services now enjoyed by residents and tourists. A final option would be increased property taxes for the next fiscal year beginning begin-ning in July, according to Loble, but admittedly a tax increase won't solve the potential budget shortfall in the current year. Loble said the deficit is not caused by budget overruns in various departments, but by revenues that are not meeting projected amounts. Loble said a recent budget review with department heads revealed only one area of city government, the library, was slightly over budget at this time, which is 1 roughly half way through the current fiscal year. Loble said the budget overrun at the library has been caused by high utility bills. Since the library building had not been completed when the budget was adopted, adopt-ed, it was difficult to estimate utility costs with a great deal of accuracy, the city manager said. Loble said one of the most serious budgetary shortfalls has occurred because of an oversight in franchise tax estimates. The franchise tax is a surcharge on utility and cable television bills. The city manager budgeted $200,000 from that revenue source and thought that money would begin coming in in July and continue through the year. Loble said she was unaware the taxes are paid quarterly which meant the city did not receive any revenue from that source until October 1. She said the city had counted on about $90,000 in revenue from that source that won't be realized this year. She says she is to blame for the oversight. Loble said it appears building and planning related relat-ed revenues could come in on budget, despite a substantial downturn in local construction construc-tion starts. Park City Building Official Ron Ivie told the Record that permits for more than $24 million in new construction have been taken out so far this year. Ivie said the figures are about $150,000 lower than those recorded at the end of 1980, the period Ivie has used to make his revenue projections for this year. He says the department has until the end of the month to process $150,000 in new applications that could bring his budget projections in as anticipated. Planning Director Direc-tor Bill Ligety said he is . optimistic his department will stay on budget as far as revenues are concerned. Even if building and planning plan-ning related revenues come in on budget, the city, manager still expects a $120,000 budget shortfall. Loble said the figure could be higher if building and planning revenues fall short of predictions, but the shortfall could be further reduced is construction picks up. Loble and Ivie say a healthy spring construction season could pull the city budget out of the red and into the black. However, it is illegal in the state of Utah to run a budget deficit, so the city must take immediate steps to bring their finances back into line. "We can't justify counting on increased building in the spring, because if it doesn't materialize, it would be too late to correct the situation and the City Council and I could be fined," Loble said. She said the city plans to correct the problem by cutting back expenditures and by seeking alternative sources of revenue like the beer tax. Initially, the city has decided decid-ed not to presently replace Bob La shier, who. resigned his more than $30,000 a year public works director post last month, according to Loble. Also, the city won't be hiring an additional police officer as planned, a savings of some $16,000 to $20,000. An $8 an hour water department employee won't be replaced either, Loble said, and the transportation director hired earlier will not assume that post. It was also learned this week, Herb Johnson, the city's $21,0000 a year fire marshall, has been laid off. . Loblev said Johnson was the first of several more possible staff reductions. As far as new revenue sources are concerned, Loble said she still favors the beer tax, which might raise some $100,000 annuallv. . In the longrun, however, Loble said tfte key to Park Citv's finances lies with the Legislature. When the Legislature begins its ses sion in January, Park City must stop a potentially disastrous disas-trous sales tax redistribution bill and secure for itself several other revenue source currently denied the city. If the proposed bill that would redistribute sales tax dollars on a population rather than ooint of sale basis passes, Park City could lose half or more of the $650,000 it annually collects from that source. To counteract the proposal, Park City is proposing an overall sales tax increase of one quarter of one percent. Under the city's proposal the increase would oe redistributed redistri-buted leaving Park City's present revenue level intact. The city is also proposing resort towns like Park City be allowed to levy an additional one percent sales tax which they would be allowed to keep. Since Park City currently only receives back one percent of the state's five percent sales tax, the additional one percent could bring as much as $650,000 annually into municipal coffers. cof-fers. The tax increase is being proposed by resort areas because they must provide municipal type services for tourists, as well as year-, round residents. Park City has, according to the 1980 census, a base population of 2,900, but must provide services during the winter to a transient population popula-tion that exceeds 12,000. Park City would also like to be able to levy a real estate transfer tax that would bring in revenue when property changes hands. |
