City Not on Same Path as Detroit - Proposed 2013/2014 Budget Released


Since last week's news that Detroit has become the largest city in American history to file for bankruptcy protection under Chapter 9, government leaders across the nation are addressing concerns from its citizens whether their town is facing similar fiscal stress and turmoil.
The news of Detroit's financial plight coincidentally comes at a time when City leaders rolled out their proposed operating and capital budget for fiscal year 2013/2014.
In asking whether Clearwater is destined to be the next Detroit, a resolute Mayor George Cretekos said, “No…with a capital 'N' and a capital 'O'. We are not in any shape like Detroit or Stockton or Fresno or Philadelphia,” cities with budget shortfalls in the millions, and in the case of the city of Brotherly Love, a debt obligation in the billions, according to news accounts.
City Manager Bill Horne said, “Historically, Clearwater has been a very conservative fiscally run city.”
Or in the words of Councilman Paul Gibson during a recent budget meeting, “We don't have spend-itis.”
During budget discussions last month, City Manager Horne told the council, “We started the current fiscal year with an optimistic spirit and anticipated that our national, state and local economies would strengthen and we would see evidence of that in rising property values, an increase in property tax revenue and other revenue sources like the sales tax. We also felt that a lower pension contribution, due to our pension reform initiative would benefit us as well.”
Horne said that what officials did not expect was that a “combined impact of operational-related expenses such as workers compensation, medical insurance, the red light camera program, property liability insurance, city election (an upfront expense for the November referendum which will be reimbursed), lobbyist services, information technology department costs, maintenance of general facilities, fleet maintenance, and contractual salary increases would moderate the revenue gains and create the alternative need to use general fund reserves to balance the proposed budget.”
In spite of that news, the city will, for the fifth straight year, maintain its current millage rate of 5.1550. In addition, the city has been able to maintain a healthy general fund reserve, at times nearly three times more than what is required by city policy. For the next budget, the rainy day fund will approach nearly $18 million. In light of what seems to be a stronger economy, city leaders say they remain apprehensive regarding the continued rising costs of doing business.
Overall, the general fund expenditures will increase by a modest one percent, approximately $1.5 million, to $114.9 million. Spending is about $8.9 million less than the 2007/2008 peak when costs tallied to $123.2 million.
Moreover, for the first time in six years, the city's property values rose. The anticipated increase of 3 percent, Horne said, brings the city's total taxable property values to $7.7 billion. Therefore, property tax revenue is expected to boost the general fund by about $36.5 million, $15 million less than the peak seven years ago. In addition, a $50,000 increase in road millage is expected to generate $1.8 million, raising the total property tax revenue to $38.3 million.
Sales tax is expected to bring in $12.4 million, up five percent. Licenses and fines will jump 17 percent to $5.1 million, of which the majority of the increase is due to fines for red light camera violations.
In his budget message, Horne offered three major savings initiatives for next year, similar to the current fiscal year, including a 1.5 percent salary savings across all departments that would generate $1 million in the general fund; using a small portion of the credit balance in the pension fund to go towards required pension contributions; and transferring $1.4 million from the general fund reserves of $19.3 million, to balance the budget.
The budget also calls for staffing changes including the addition of two police officers for the beach district to ensure its family-friendly image in an effort to preserve its lucrative tourism base, the city's number one industry, and to entice more domestic and international visitors.
Four positions are budgeted for the reverse osmosis plant. Two high paid assisted director positions in the stormwater division and customer service department were eliminated.
The budget also reflects a two percent increase, $1.4 million, in personnel compensation for 1,689 employees. The $79 million budget item includes a 2.5 percent general wage increase effective October 1 for all police and fire union employees. The budget also accounts for a 2.5 percent general wage increase for all Communication Workers of American (CWA) employees and Supervisors, Administrative, Managerial and Professional (SAMP) employees on their annual performance review date.
Other increases in budget expenditures include: $11.5 million for the cost of medical care for employees, an increase of $1.7 million; $4.34 million for property and liability insurance, up $500,000; and $2.97 million in workers compensation costs, an increase of $420,000.
In brief, the upcoming fiscal year budget reflects a city leadership team focused on managing their expenses and revenues to avoid ever becoming another Detroit.
For more information about the city budget, visit
Public hearings on the budget are set for 6 p.m. Tuesday, Sept. 3, and Thursday, Sept. 19, at City Hall.

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