By Andy Ross
Killeen Daily Herald
Late last month, Killeen's Interim City Manager Glenn Morrison received a warm reception from the City Council and Mayor Tim Hancock upon unveiling the 2011-12 proposed budget.
With no tax increases scheduled and general fund expenditures decreasing to a level within $490,000 of anticipated revenue, Morrison said the city is on its way to a balanced budget.
But the proposed budget's public hearings, which start Tuesday and continue throughout August, will serve as the true test of the numbers.
In the meantime, Morrison and other city leaders are pointing at the proposed budget's $258.49 million in total expenditures - $69.15 million of which is set aside for the general fund - as evidence of a fiscally conservative plan.
"As we go forward, Mr. Morrison and staff will continue to tweak this budget and I think we're going to come out ahead of the game," Hancock said Friday. "I am optimistic about it and think we are on the right track."
Only examining the general fund, which encompasses the bulk of the city's operational costs, next year's budget proposal has a 2.4 percent decrease in expenditures from the current fiscal year's $70.84 million.
For 2011-12, revenues are predicted to land at $68.65 million, a figure that would put the city within striking distance of a balanced sheet.
Methods pitched to slim down the general fund and simultaneously raise revenue - the original shortfall was projected at $3.7 million - involve a combination of cuts, fee increases and shifting operations into other funds.
During an interview on Friday, Morrison said the city is placing more emphasis on bridging the gap between costs and expenses in 2011-12.
"Up until three years ago, revenues always came in higher than expenses," Morrison said. "So we were very conservative on the revenue side and with the expense side, a little more aggressive. The past two, and now three years, that's not been the case. Revenues have not come in higher than expenses, so going into this budget year we wanted to slow down and get back to the maintenance of operations, look for efficiencies within, and try to eliminate or reduce the need to draw down the fund balance."
In terms of cuts, next year's proposed plan includes trimming roughly $1.7 million in expenditures based on the current budget. Those cuts are planned for a host of line items within the general fund.
For example, recreation, athletics and parks are scheduled for a $266,600 combined reduction. About $133,000 would be cut from the library and $133,400 from the family aquatics center.
Eliminating and/or not filling vacant positions - five from the public works department - would save close to $244,000. And then there is the plan to save roughly $70,000 by outsourcing grill operations at the city-owned Stonetree Golf Course.
On the revenue side, usage fees are planned to increase at the golf course, Killeen Civic and Conference Center, airport and in recreation programs. Finally, various operational costs within the general fund are expected to move into the water and sewer and solid waste funds.
Fund balance concerns
Morrison said one of the main drivers for reducing general fund expenditures is improving the health of fund balance reserves.
Per city policy, reserves ideally should maintain a minimum balance equal to 25 percent of the overall general fund. But at various times in recent years, reserves have fallen well below that mark - a direct result of using fund balance money to bridge general fund shortfalls.
By the close of the 2007-08 fiscal year, for example, Killeen boasted a fund balance of roughly $20 million. Two years later, that figure had dropped to slightly more than $17 million.
The downward trend continued into 2010-11, with an end-of-year projection of $13.4 million adopted last September. Morrison said roughly $3.5 million in reserves are planned to be allocated toward closing out the current fiscal year. This amount includes the controversial $750,000 used in March to buy out the contract of former City Manager Connie Green.
However, through an auditing adjustment - a measure that will include unaccounted-for sales tax revenues - the reserves are projected to close out the current year at $17.7 million.
"Our fund balance had dipped down below that (25 percent mark) and that was a concern of the City Council," Morrison said. "That's what they said we need to correct, so this year we will be closer to 25 percent. I think we are moving in the right direction and will be stronger going into 2011-12."
A look back
Even though next year's expenditures are proposed to decline, a quick look at previous budgets reveal a clear trend of increasing budget figures.
For 2007-08, adopted general fund expenditures stood at $59.24 million. Two budgets later, they had climbed to $61.39 million in 2009-10.
The following year, the City Council approved a 10 percent increase, with $70.8 million in expenditures. A $3.4 million increase to the Killeen Police Department's budget and an additional $1.3 million to the fire department were large factors in that dramatic jump.
In conjunction with the growth in expenses, the city's total staff also has risen, going from 1,131 employees in 2007-08 to 1,227 now.
By comparison, only 818 employees worked for the city in the 2003-04 fiscal year.
Morrison said he attributes the increasing size of the budget to new facilities and in general, the demands that come with a growing population. The rising costs of health insurance and fuel are other concerns, he said.
"In my opinion, those years were not different than any others except for the fact that a new police department headquarters came on line, we maintained staffing at the downtown police department, the Family Aquatics Center opened and we continued to see a population grow at a tremendous pace," Morrison said in a statement Friday.
"Besides the capital improvement projects, it quite simply was the fact that demands for service mirrored the growth in our community," Morrison said. "As indicated by the latest census, Killeen grew by 40-plus percent in that 10-year period. That really says it all."
Contact Andy Ross at firstname.lastname@example.org or (254) 501-7468.