Wednesday, Sept. 2, 2009 | 2:05 a.m.
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Beyond the Sun
Just one month after approving a round of budget cuts intended to carry the city through the recession, plummeting tax revenues are prompting the Henderson City Council to consider additional cuts.
Consolidated tax revenue – the money collected on sales and other taxes that is distributed amongst local jurisdictions – fell 21.73 percent from June 2008 to June 2009. The money accounts for one-third of Henderson’s General Fund revenue.
Henderson Finance Director Steve Hanson said the decline was far greater than the 15 percent drop the city had forecast and marked a disturbing trend in that it was the second straight year of double-digit declines.
Between June 2007 and June 2008, consolidated tax revenue fell 13.92 percent. June 2009 also marked the 10th straight month of double-digit decline when compared to the same month in the previous year, and the 28th consecutive month of overall decline.
“What we’re seeing now is two years of year-over-year, double-digit decreases, and you have to go back quite a way to find something like that,” Hanson said. “We’re still not seeing a lot of bottoming action in the numbers.”
In August, the Council unanimously approved the first tier in a three-tier system of budget cuts. The cuts permanently deleted a number of vacant positions and cut line items throughout the city budget, creating projected savings of almost $9 million per year.
However, with tax revenue coming in so much lower than expected, it essentially negated 80 percent of what the Category 1 cuts would have saved Henderson last month, Hanson said.
Hanson said he will be briefing council members on Category 2 cuts, which include cuts to municipal services, in the coming weeks should their adoption become necessary.
If approved, the Category 2 cuts will save the city another $10 million to $12 million annually, and balance the budget based on current projections, which have been updated based on consultations with local economists, Hanson said.
In the updated five-year budget projection that Hanson showed the City Council Tuesday night, every possible reserve fund in the city’s budget was exhausted to keep Henderson in the black.
“There is no more question about how much more money we can put on the table to keep a positive ending fund balance,” Hanson said. “All the available money is now on the table.”
The Category 2 cuts, if implemented, would allow the city to hold on to some of its reserve funds, Hanson said.
The Category 3 cuts, if implemented, would include layoffs of city employees.
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