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City starts budget talks
Feb 14, 2013 6:50 pm
In an effort to get a jump start on upcoming budget decisions, the Lebanon City Council met Wednesday evening for a preliminary budget meeting.
Finance Commissioner Russell Lee wasted no time jumping right into the discussion of the budget beginning with revenue numbers. He said revenue was down 1 percent in December, but up 3 percent overall from last year.
"That's just under where we were in 2005-06, our highest year ever," he said. "The effect on our general fund budget is the hardest to predict."
Lee also started laying the groundwork for several of the more expensive items in the budget, including utility costs, fuel prices and the cost of health insurance for city employees and retirees.
He went on to tell the councilors most city department heads were due to have budgets submitted to his office that day. Lee also said it would be about a week before the budget requests would be inputted into the city's new accounting system.
Councilor Lanny Jewell said the new system should streamline the process once it's fully operational.
"Yes, we're in the process of upgrading the software," Lee said. "The old interfaces simply won't work. I'm glad we got the 2013 version. You want to do as current as you can get. I would envision information at a detailed level after the first council meeting in March."
Lee said fuel costs are, as always, anybody's guess.
"When it comes to fuel costs, basically it's soup," he said. "As for the experts, they don't know, and our guesses are probably as good as their guesses. Prices have generally been up this year, but I can't put generally in the budget. If it goes up to $4 a gallon, I'd be back saying 'hey guys, we need another $300,000.'"
Mayor Philip Craighead also commented on fuel costs.
"There has been a rise and fall. The last three years have been pretty average, and we've been conservative in our usage," he said.
The group discussed how much more should be budgeted for fuel.
"That's the kind of information I need from the council," Lee said. "Should we estimate an 8-percent increase or a 10 percent increase? Nobody knows. It's a guess, but I like to think with our experience, it's an educated guess."
He said the city bids the contract to supply gas every year, and the same four distributors bid. Which one wins the contract depends on the prices when the bids are made.
In the end, the group agreed to estimate an 8-percent increase for the fuel budget.
The cost of utilities in city buildings is an area of the budget with some unknowns considering the city is in the middle of upgrading several systems under contract with Johnson Controls.
As for utility costs, Lee said he had spoken with officials from Middle Tennessee Electric and the Tennessee Valley Authority.
"TVA doesn't anticipate a rate increase," he told councilors. "So I'm recommending no increase in the budget for utilities. I tend to be conservative."
Lee also said estimates for utility costs should include the caveat "are subject to change." While Craighead noted gas and electric prices have been "pretty stable."
"With the changes with Johnson Controls, utility costs should go down if rates hold where they are," Lee said, explaining even if rates go up, the city will still be spending less than if the old systems were still in place when rates were raised. "Any savings realized would be put into debt service."
He then moved on to one of the biggest parts of the city budget - health care.
"Nobody knows," was how Lee summed up the estimate on health care costs. "It all has to be calculated by individual rates and family rates."
Wednesday's meeting was the first in a series of preliminary budget meetings designed to bring the council, and especially its newly elected members, up to date on current budget issues. The real work will begin when the department budgets are on line and ready for review.