Finance director says Eureka Springs budget is improving

Friday, August 4, 2017

The city of Eureka Springs is slowly recovering from its budget problems, finance director Lonnie Clark reported Thursday, July 27.

At the Eureka Springs City Council’s annual mid-year budget review, Clark said last year’s spending freeze has helped the city control expenses. The city’s expenses still exceed its revenues, Clark said, but the finances are improving.

“That is really refreshing to me,” Clark said. “If you look at our bank balances … for the first time in a long time, we’ve bumped over the $4 million mark.”

This means the sales tax revenue is increasing, Clark said. He recalled when Mayor Butch Berry declared the spending freeze in 2016, saying it has been successful. Alderman David Mitchell pointed out the city’s expenses and said that’s still a big concern.

“This is with mayoral expense control, which is pretty severe … pretty severe, so, folks, the challenge is still upon us,” Mitchell said.

“There’s no question about that,” Clark said. “It’s improving somewhat.”

“It’s improving based on sales tax. Any blip in tourism, and we don’t have a strong back-up system,” Mitchell said.

Clark said the city’s revenue should increase as the year goes on, saying the fire department recently cleared up a problem with Medicare billing.

“Everything was approved, and we’ll get a big bump on that,” Berry said.

Mitchell credited the fire department with getting expenses under control but said it’s not easy to budget for revenue related to healthcare.

“The fire department has really stepped up to plate and is really trying very hard, but it’s hard to squeeze money out of healthcare like that,” Mitchell said.

Other revenue has yet to come in, Clark said, including property taxes. He said the city should receive the bulk of the revenue from property taxes in November, and alderwoman Peg Adamson said she was surprised at the city’s sources of revenue. According to a chart presented by mayoral assistant Kim Stryker, the city’s revenue sources are the sales tax (37 percent), parking (12 percent), ambulance service (11 percent), property taxes (10 percent), beverage taxes (9 percent), fines (7 percent), licenses (5 percent), franchise fees (3 percent), permits (2 percent), recycling (2 percent) and “intergov” (2 percent).

“It’s interesting how the sales tax is such a high part of the chart. Then I’m looking at this … property taxes are a pittance when the whole city is made of buildings,” Adamson said.

Clark said the city will receive a significant amount of revenue from property taxes, but he won’t know how much until that money comes in. The property taxes, alderwoman Kristi Kendrick said, help the city at the end of the year.

“That’s where we get the money that goes into reserves to carry us through lean times during the year,” Kendrick said. “What we got last year goes into reserves. That’s what carries us through some of the lower dips at the beginning of the year.”

Even though the expenses exceed revenues, Clark said he’s hopeful the city will catch up in the second half of the year.

“There have been some discussions about sales tax projections being down or some of the revenue items,” Clark said. “I really don’t want to reduce our budgeted numbers at this point, because I feel like we’re not that far off.”

“When we budgeted, I don’t think we budgeted for an increase, did we?” alderman Terry McClung asked.

“We were pretty flat,” Berry said.

Clark pointed to some of the mid-year budget adjustments he’ll be bringing to the council table, saying the transit department is asking to move some excess funds from vehicle insurance to employee health insurance.

“They’ve had a change in the mix of personnel over there, and they need it in health insurance,” Clark said.

The city recently settled its lawsuit with former firefighter Jason Morris, Clark said, and will be paying $45,000 in the settlement.

“Because the mayor’s budget and the fire department budget are both under the general fund, we won’t have to do anything besides pay to transfer it,” Clark said.

Another potential expense, Clark said, is LED lighting in city-owned buildings. Clark said this lighting would save the city money quickly. The city will be replacing a police officer soon, Clark said, so the budget will include the new officer’s salary. Adamson asked why the city was hiring a new employee, and Berry said it will cut down on overtime expenses.

“We can maintain the status we have. Otherwise, we’re going to be paying overtime for the police officers,” Berry said. “It’s cheaper to pay a salary position rather than overtime.”

At the end of the year, Clark said, he’ll have a good idea of how to move forward on the budget.

“If we come up and we’re short, we’ll have to pull from the reserves, because we, by state law, have to have a balanced budget beginning and ending,” Clark said.

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