BY COUNCILOR STAUBER:
The city of Duluth does ordain:
Section 1. That Ordinance 9707 passed and approved December 20, 2004, is hereby amended by appropriating an additional $600,000 from the general fund’s excess revenues in investment earnings in the amount of $600,000 as follows:
Department 100 - fire ....................... $150,000
Department 200 - police ..................... $250,000
Department 500 - public works ............... $200,000
Section 2. That this ordinance shall take effect immediately upon its passage.
STATEMENT OF PURPOSE: This ordinance would increase the city’s 2005 general fund appropriation authority by $600,000. This technical amendment would be paid for out of current year excess revenues, not from the undesignated, unreserved fund balance of the general fund. The city is anticipating revenue in excess of budget in the area of earnings on investments in the amount of $600,000. The impact on fund balance of the proposed amendment is neutral in that the city is using excess unbudgeted revenues to fund the appropriation. At this time, we are anticipating fund balance to remain flat with 2004's ending balance of $4.16 million or approximately 5.87% of the general fund operating budget.
The city has faced budget challenges this year beginning with a loss of $100,000 in revenues due to the rescinded license inspection fees that were approved for the 2005 budget. Department overtime and temporary lines have been over expended by $1.1 million because of the hiring freeze. However, offsetting that over expenditure are surpluses in permanent salaries and benefits due to unfilled vacancies totaling $900,000. An additional $200,000 has been allocated to fund the nine police officer and five firefighter vacancies that have recently been filled. Another item impacting the budget was the unanticipated salary and benefit settlements and payouts totaling $250,000. Finally, the most significant expenditure issue we are facing is the impact of increased fuel and utility expenses. The full impact will not be known until year ’s end, but we are estimating a $400,000 shortfall in those areas. All of these items listed above total a net $1.1 million in possible over expenditures.
We believe we can reduce the anticipated shortfall by making some minor changes. We have been addressing the issue of overtime and are anticipating reduced overtime expenses in police and fire due to the hiring of additional personnel. We are reviewing the capital budget to potentially reduce spending by $250,000. Our challenge from the mayor is to reduce other spending by $400,000 to $500,000 by the end of the year by limiting spending to only those items which are absolutely essential.