The Allen City Commission started coming to terms with a funding shortfall Thursday as members slashed the city’s new budget and cut funding for the few services it provides taxpayers.
It may be impossible, however, for Allen to operate next fiscal year on the budget that was approved.
The first reading of the budget, held on June 3, showed Allen would have $178,700 in revenues and expenses.
On Thursday, commissioners voted to decrease that amount by nearly $98,000, giving the city $81,000 in funds for the 2019-2020 fiscal year.
The city’s current fiscal year budget, which ends June 30, allots more than triple that amount, more than $258,000.
The commission approved numerous changes, all of which become effective on July 1.
City commissioners vowed to take no pay in the upcoming fiscal year, Commissioner Elmer Parsons agreed work for free as the city’s maintenance supervisor for half of the year and he and Mayor Sharon Woods pledged to buy the gas needed for that department in 2019-2020.
Commissioners agreed to lay off a maintenance employee and cut hours for the city police chief and clerk to 20 hours per week. They also eliminated all funding for city streets and an AIRMED contract that financially helps residents who are flown out for emergency care. They eliminated the contingency fund, which was budgeted at $21,700 on June 3.
They also decreased funding for the police department from $5,000 to $1,000, office supplies from $1,500 to $500, maintenance from $2,500 to $300 and utility expenses from $20,000 to $13,700.
The second reading of this budget was unanimously approved, but it does not appear to be realistic.
It includes total revenues and expenses of $81,000 in Allen, with $21,000 in funds carried forward from this fiscal year and $60,000 in revenues from the insurance premium tax. No other revenues are budgeted, although the clerk reported the city also receives about $1,200 in property taxes annually.
Commissioners chopped expense line items, bit by bit, approving motions for each cut to match expenses to the expected $81,000 in revenues.
In expenses, the commission cut the payroll by more than half, from $62,000 — the amount it has been budgeted since 2016 — to $26,400. They reported that those funds will pay the salaries of the police chief and the clerk working part time. That amount does not provide funding for the city attorney, the half-year Parsons said he would require pay for through his employment contract, or funds for the city’s payroll clerk. When asked about whether funds for that employee was accounted for after the meeting, commission members immediately re-adjourned the meeting to discuss her pay, with no action taken. They said the $26,500 reported in the meeting covered her salary as well, but that amount equals the collective total that the police chief and clerk said they’d receive if they worked part time.
When asked about the issue after the meeting, City Attorney Beth Shortridge said the budget will have to be amended.
The discussion that led to all of these cuts started with a comment from Commissioner Clyde Woods, who said, “We are broke, in other words.”
“Close,” Mayor Woods told him.
“That or bent?” he responded.
“Bent,” she said.
The need to slash the budget came a week after the commission discussed a letter from the Kentucky State Auditor’s office that informed Allen of a new state law that requires the withholding of all funds from cities that are not compliant with auditing requirements.
State law requires Allen to submit an audit for every odd-numbered year, but the last audit Allen provided the Kentucky Department for Local Government was for the 2008 fiscal year, and it was submitted in 2010.
Allen provided the DLG with estimated budgets for the 2015, 2016 and 2017 fiscal years to come into compliance with laws requiring cities to file Uniform Financial Information Reports and, in doing so last year, the city received $30,000 in municipal road aid funding that had been withheld since 2010. It is still delinquent with its audit requirements, however.
The Kentucky Department for Local Government reports that Allen qualified to receive $3,944 in municipal road aid this fiscal year and it only received $3,600 because the June 13 payment was withheld from the city due to a financial reporting delinquency.
The discussions about the budget and the city’s audit issues were extensive during the special meeting on Thursday, with several questions from commissioners unanswered.
Commissioner Eilene Kinzer said, “As of now, we’re not receiving any funding at all. We do not get any funding, no estimated revenues on this budget here, so we really can’t be spending any money because we don’t have any.”
Parsons told her, “It depends on what these guys charge for the financial work and the audit, whether we stay afloat or not.”
Shortridge said, “I don’t even know if you really have enough money to go, I don’t how much more months. I mean, you’re making a budget and it’s estimated, but you all don’t have money.”
City Clerk Krystal Spurlock reported that the city has $21,700 in the bank and spends between $5,000 and $6,000 per month.
“That’s what I’m saying,” Shortridge said. “You’re going to have to start looking on where to cut or you’re not going to make it.”
“We’re going to cut,” Mayor Woods said. “I’m not going to be receiving any pay. Maintenance department is not going to be receiving; Fudd’s not going to be receiving, and we’ll start with the highest part and work down.”
Kinzer said those cuts aren’t enough to balance the budget.
Clyde Woods at one point, said, “Oh, (expletive deleted),” and Parsons suggested eliminating the police department, the maintenance department, and then, everything.
He made a motion to “cut everything to zero.” It failed for the lack of a second, however.
Police Chief Thomas Gearheart said it “would not hurt my feelings whatsoever” to become a part-time employee.
“I don’t think we can do that, Thomas,” Parsons told him, saying they have to eliminate the police department. “We got to cut the fat somewhere or we’re not going to make it.”
Gearheart told him, “Well, if you want to stay a city, then you have to provide some services,”
Shortridge reiterated that comment.
“I think as a city, you’ve got to see what services you’re offering your citizens,” she said.
Mayor Woods said the city survived for several months in the past without a police officer.
“I don’t like it. I don’t want to do it, but if it comes down to it, we’ll do what has to be done,” she said.
Eilene Kinzer said, “But the police department is one of the things that we offer to the town, one of the few things that we do offer, so I don’t know if we want to take that.”
That’s when Parsons asked, “How did we get in this mess?”
“Very carefully,” Clyde Woods told him.
Commissioners spent about an hour discussing cuts. It marked the first time since at least 2015 that the commission publicly discussed where the city gets its revenues.
Spurlock told them the city has $21,700 to carry forward from this fiscal year, $15,000 every four months, or about $60,000, in insurance premium taxes and $1,200 in property taxes.