City Manager poses ominous budget remedies

BY CHUCK VANDENBERG
PCC EDITOR

FORT MADISON - After tonight's regular city council meeting, a very real discussion could take place on how to bring the city's budget woes back in line.

And some of the things on the chopping block could include a police officer position, the Old Fort, the proposed Amtrak passenger depot relocation, and other tough cuts.

In a nine-page breakdown for the city councilmen that was sent out Friday, Fort Madison City Manager David Varley said January's budget workshop didn't produce any results and with a budget proposal slated for two weeks, some decisions need to be made.

The city is facing a minimum working capital that Varley indicated isn't sufficient to meet one month of the city's cash flow responsibilities.

The full text of Varley's analysis can be viewed below.

"At the first budget workshop, decisions were not made which brings the Proposed Budget into good balance," Varley wrote. "This second Budget Workshop provides options for the City Council. The purpose is to review and use these to help you make decisions that we can include in the final budget which will be presented on February 19th."

Varley said sales tax woes are at the center of the issue with the city experiencing a 15.7% drop in sales tax revenues off the 1% local option tax in the last fiscal year. He said projections show another similar drop this year, estimated at $333,000.

The first option he presented to the council is what he dubbed "The Null Alternative", which is to do nothing and present the budget in its present condition, which would leave the city exposed with reduced minimum capital numbers and an end-of-year general fund budget of just under $4,000.

The second option considers eliminating the construction of the Amtrak Passenger Platform. Varley projected that move would save approximately $382,000 and push the city's minimum working capital over $732,000.

"Eliminating this project will reduce both the upfront capital costs, as well as the annual operating costs that will be incurred by the City in the General Fund. So, this would produce an annual cost savings to the General Fund in every budget year going forward," Varley wrote.

The third option is personnel reductions, eliminating outside contributions to events, closing the Old Fort, and eliminating all marketing by the city, which, all in, would save the city $337,000 according to Varley's projections.

A fourth option would entail the city borrowing from the Highway 61 Project Fund to help pay for the relocated Amtrak depot platform. The city would borrow the money at 3.6% interest to itself and pay back the loan in five years with a $54,708 annual payment, netting a $23,540 interest earnings.

The final option is reclaiming about $177,000 in revolving loan funds. Varley said that money could be used in a combination of several ways to stave off some of the other proposed cuts.