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City budget cuts warned
With reversion tabled, some say reductions certain

Thursday, December 12, 2013

By MICKEY POWELL - Bulletin Staff Writer

Some Martinsville City Council members think future budget cuts are certain now that the idea of the city reverting to a town has been shelved.

“We can’t sustain” balancing budgets with reserve funds, Vice Mayor Gene Teague said Wednesday.

“I don’t think that’s a practice we should continue to do,” said Mayor Kim Adkins.

However, Adkins maintains that, despite what an accounting firm’s study shows, city finances are not as bad off as some people apparently think.

A three-member majority of the council voted Tuesday against a motion by Councilman Danny Turner, seconded by Teague, to petition the state Local Government Commission for reversion.

Under reversion, Martinsville, an independent city, would become a town in surrounding Henry County. A study by the Robinson Farmer Cox Associates accounting firm showed that Martinsville could save up to $28 million a year by reverting because the county would take over certain local government functions, including constitutional offices and probably schools, that it now must provide as a city.

For the past few years, Martinsville has used reserve funds to balance yearly budgets. The study showed if that continues, the city’s $17 million overall fund balance will be depleted in three years.

“If the main argument to revert is because we’re broke,” Adkins said of the city, “that’s not a true assessment.”

Findings in the Robinson Farmer Cox study, she said, essentially were based on “a snapshot in time” — the fiscal 2014 budget — and reveal that “If we maintain that pace, we’ll be out of (reserve) money” in fiscal 2017.

“Historical revenue trends” also were taken into account in the study, she said.

In the past 10 years, Martinsville’s finances have improved, Adkins said.

For instance, she said, the general fund balance has grown from $792,000 to $7.2 million, cash in the general fund has increased from $173,000 to $7 million and the proprietary fund balance has jumped from $17 million to $28 million. Proprietary funds include services such as water, sewer and electricity.

According to Adkins and Councilman Mark Stroud, the city is conservative in its budgeting, purposely trying to overestimate expenses and underestimate revenues each year.

“Through prudent government,” Stroud said, the city is “so much better off financially than we were” when reversion previously was considered about six years ago.

But in recent years, revenues have been flat while expenses have increased, Adkins said, citing inflation as a factor.

Furthermore, she said, the city has invested in projects, such as expanding the Martinsville Information Network (MINet), to enable it to prosper as the economy improves. That has added to expenses.

Stroud said “a lot of things have happened recently” that will boost the local economy, such as company expansions and ongoing efforts to redevelop the former Henry Hotel.

“We have survived ... the worst economic times since the Great Depression,” Stroud said. “I think we’ll continue to prosper.”

At the least, “I don’t think we’ll be broke in 2017,” he said.

Still, “no doubt we’re going to have to make budget cuts” in the future, said Turner, who has voted against every city budget since he first was elected in 2008 and has consistently pushed for leaner city government.

“Funds are not there to support services we currently offer,” Teague said.

Based on what city residents say they can afford, “I don’t think we can raise taxes at all,” Turner said.

Where cuts can be made is anybody’s guess right now.

“Most of the easy cuts are done” already, Teague said. Examples he cited include streamlining city departments and not filling vacant positions that are not crucial to city operations, such as a parks and recreation director and public information officer.

Cuts already have been made to more critical parts of city government, including the police and building inspections departments, Teague said.

For now, he said, “we must focus on monitoring expenses” and evaluating services to see if they could support further cuts.

Departments “may have to be cut across the board,” Turner said, “and then (the city may have to) fine tune” budgets with other cuts.

Eliminating entire departments may have to be considered at some point, Teague said, declining to speculate about which ones.

He and Turner both said, though, that they do not think the city would benefit by eliminating its paid firefighting/emergency medical services force.

“Volunteers are just not there” (available) anymore to do the work, Teague said.

Stroud said, “It’s way too early for me to comment on any budget cuts.”

City employees will begin preparing a budget proposal for fiscal 2015, which will start July 1, early in 2014. Stroud said he thinks the budgeting process will not be “as onerous” as it was in the past year.

Adkins said it is premature for her to say what budget cuts may be needed “because I respect the process we’ve put into” place over the years in which the city manager develops the budget and the council takes it from there.

Referring to City Manager Leon Towarnicki, she said, “I’m open to hearing what he recommends” first.

Councilwoman Sharon Brooks Hodge could not be reached for comment Wednesday.


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