A 2004 spending plan being considered by Augusta commissioners goes against the advice of at least two officials in key city finance positions.
And as the commission takes up the budget again this week, it's unclear whether the advice of Augusta's finance director and chief appraiser will be heeded.
"I think what the commission is doing now, they're just getting all the information in," Chief Appraiser Sonny Reece said.
Yet in all the budget proposals being considered by elected officials, the city is relying on 3.5 percent growth in the tax digest under a recommendation not from Mr. Reece but from City Administrator George Kolb. That growth would collect an additional $1.4 million across city funds.
"They've heard my piece. They know where I stand," Mr. Reece said.
He has advised commissioners to budget for zero growth in the tax digest after an unexpected 0.4 percent decline this year.
When commissioners reconvene Wednesday to consider the budget again, Mr. Reece said, "I'm going to stand my guns, just like I have.
"I've looked at the numbers, and I think we ought to be conservative."
City Finance Director David Persaud says not only does he support Mr. Reece's recommendation, but he already has been down the road elected officials are now traveling.
First, Mr. Persaud explains, the government starts trying to slow the filling of positions in an effort to cut costs.
Then it freezes all vacant jobs, creating savings by not paying those salaries..
And then comes the dipping - dipping into general fund reserves, which is the governmental savings account that keeps the city running in the event taxes can't be collected.
It's like going to your personal savings account to pay for rent and food: Reserves, like savings, will bail you out in the short term, but once spent, the money's gone, and expenses have stayed the same.
"You're filling the gap with short-term solutions," Mr. Persaud said late last week from his second-floor office in the municipal building.
And he should know. "That is exactly what Chatham County did."
Prior to taking the job in Augusta, Mr. Persaud worked for the Chatham County government for nearly 15 years. When he was hired last year, he told Augusta officials he was leaving behind a government in financial shambles, one in which elected officials ignored his warnings about the dangers of depleting reserve funds without cutting expenses.
By the time he arrived in Augusta in June 2002, Chatham County had completely depleted its fund balance and was in the red $5 million. The county was borrowing in the short term to make up for cash-flow problems and headed into its 2002-03 budget year expecting the shortfall to more than double.
Chatham County still is struggling to recover from those poor financial decisions, Mr. Persaud said, but now Augusta seems to be heading down a similar path.
In all the budget plans Augusta commissioners are considering this month, including one proposing a quarter-mill tax increase and raises for city employees, money from the general fund is being used to pay for recurring city expenses.
This year, Augusta has used $1.8 million from the fund to cover costs.
There is a chance some of that money could be recovered: In 2002, the city used $1.7 million in reserves to make up for shortfalls in the law enforcement fund, but added back $1.8 million in year-end savings.
But next year, commissioners are considering more than doubling the amount used from the general fund to $3.7 million, for a total of $5.5 million over two years.
"I'm a little scared, because we're using $3.7 million in reserves (for 2004), and we only got $1.8 million (back) in 2002," Mr. Kolb said.
If those reserves do end up being used, according to a work sheet prepared by Mr. Persaud earlier this month, that will represent a 22 percent drawdown in total fund balance - from $25.3 million at the end of 2002 to $20.3 million by the end of next year.
In addition to drawing from the reserve, a plan proposed last week suggests "manpower management" savings of $1.5 million.
That management plan consists of holding all vacant positions open for 90 days, with some exceptions for "vital" jobs. Those are determined by the administrator.
If enough money can be saved and tax revenues do indeed grow, then city employees would get an across-the-board pay increase of 2 percent.
But Mr. Kolb already has budgeted for nearly $1.9 million in manpower savings, which means that, to stay balanced, the city would have to manage $3.4 million worth of salary savings - about 6.8 percent of the entire annual payroll.
It's a flawed way to reach financial solvency, Mr. Persaud said.
"(In Chatham County,) when the money ran out, they went to the manpower management, and then they went in the red," he said. "What are you going to do in '05? You need to maintain fiscal stability for '04 and beyond."
Reach Heidi Coryell Williams at (706) 823-3215 or firstname.lastname@example.org.
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