City's financial future remains bleak despite error in calculating sewer revenue decline

By Ralph Pokorny

Nevada Daily Mail

Since July 25, when interim city manager Harlan Moore told the city council that the city has lost about $2 million in commercial sewer revenue since 2002, several city councilmen and other council observers have been scratching their heads wondering why they had never heard anything about this before.

A look at the budget information provided to the city council members each year since 2001 at budget time, as well as amended budgets throughout the four-year time period did not show anything approaching this magnitude of decrease in sewer revenue.

Further review indicated that information provided to Moore by Terry Sercer, of Diehl, Banwart & Bolton, who the city council hired to look at the city's finances, was wrong, but the city still faces a bleak financial picture

Sercer told the council during a special meeting Tuesday night that the city had actually lost about $500,000 in commercial sewer revenue since 2002, not $2 million.

"However, this doesn't change the city's financial picture," Sercer said.

What has happened over the last four years is that all of the city's major sources of revenue, property taxes, sales taxes and franchise fees, have all decreased, while the city's expenses have continued to increase, he said.

Sercer told the council between 2002 and 2006 the city's revenue has increased by about 14 percent while the city's expenses have increased by about 29 percent.

"That's what caused the financial deficit," he said.

Sercer told the council that he had looked over the amended 2006 budget that the council approved Tuesday night and it appears that the city will end 2006 with about $70,000 in the water and sewer fund and about the same in the general fund.

The amended budget incorporates all of the cuts realized from the reorganization of the city government as well as other budget cuts implemented by Moore.

"It's not a huge amount, but it's at least positive," Sercer said of the estimated year-end balance.

The 2006 budget still has a $900,000 transfer from water and sewer to the general fund; that will not be available for next year he said.

In 2007 the city will get the full benefit of the restructuring, but you will have to keep a close watch on the revenues and expenditures, he said.

In other business the council:

* Approved spending up to $60,000 in additional transportation sales money to cover the cost for additional asphalt and other expenses incurred by APAC of Missouri Bituminous Resurfacing for this year's street construction program. The money to cover this is available from the city's transportation sales tax.

* Voted 5-0 against accepting the low bid for the improvements to the main runway at the Nevada Municipal Airport.

* Passed on first reading a special ordinance rejecting all bids for improvements to the main runway at the Nevada Municipal Airport and to have Burns & McDonnell re-bid the project. This will delay start of work on the project by at least four weeks to meet federal requirements on the bid process.

* Passed on first reading a special ordinance approving paying Burns & McDonnell for design phase services that have already been completed on the airport runway improvement project.

* Passed on second reading a special ordinance approving an agreement to allow Vernon County to use the city's GIS equipment to continue the mapping program. The equipment will be operated by a former city employee who used the equipment for the city.

* Gave final approval to a special ordinance setting the general and special property tax levies for 2006. The general city property tax rate will be set at $.6548 per $100 assessed valuation and the library tax will be set at $.1988 per $100 in assessed valuation.

This will raise the city's real and personal property tax levy to the maximum permitted by the state from $.5350 per $100 assessed valuation, a rate that was below the 2000 ceiling. The city has voluntarily lowered the tax levy each year since 2002, but opted to raise it again this year. The increase in the levy will generate about $100,000 more taxes than was collected in 2005. This increase in the levy of about 12 cents per $100 assessed valuation will increase the property tax on a house assessed at $50,000 by about $60.