The city of Paducah proposes a balanced budget for fiscal 2021, as officials work through the annual budget process and make adjustments during the COVID-19 pandemic.
“The proposed budget tonight is balanced,” City Manager Jim Arndt said.
Arndt, Assistant City Manager Michelle Smolen and Finance Director Jon Perkins led an informal — and virtual — budget workshop Tuesday and went over different budgetary measures, funds, departments and budget changes, including those made in response to the pandemic and projected revenue decline. It was held before Tuesday’s city commission meeting.
“Based upon the medical recession that we’re in right now, we are projecting a 10% decrease in our major revenue sources,” Arndt said. “This is going to directly impact our General Fund and the Investment Fund.”
Paducah’s proposed budget for fiscal 2021’s General Fund — or main operating fund — is $35,888,465. It marks a roughly $85,000 decrease from fiscal 2020’s original budget of $35,973,950.
The city’s Investment Fund is budgeted for $5,113,560. It gets revenue from the payroll tax and is dedicated to economic development, neighborhood redevelopment, infrastructure capital investment and property tax relief, according to the city’s website.
Overall, the proposed budget includes a 2.5% cost of living adjustment increase as contractually obligated for police and fire unions, as well as non-represented employees. American Federation of State, County and Municipal Employees (AFSCME) will receive a contractually obligated 2% increase, according to the city.
The proposed budget also has 12% in reserves for the General Fund, funding for current capital projects, money for the Grant-in-Aid program to assist outside agencies and doesn’t project a property tax rate increase.
“The budget does include all of our annual debt requirements whether that be from the General Fund or the Investment Fund ($3,968,945),” Arndt said.
To help balance the budget, the city looks to use about $1.5 million from its unreserved General Fund cash balances, $500,000 in reserves from its Debt Service fund and to use $789,375 from its radio fund to pay its portion of an annual subsidy for 911 operations.
The proposed budget includes a hiring freeze for the fiscal year and a freeze for merit increases.
“And so,” Smolen said, “the approach here is that the positions that were vacant during the budget development are frozen.
“Positions that are currently filled will be backfilled as they’re vacated. Also, we are instructing supervisors to continue their evaluations and basically submit the request for merit. … When we get into the six-month look back and see how revenues are doing, we hope to start to thaw this freezing of positions and merit pay. So, that would be something that we hope will not be frozen for the entire year. It just depends on what our revenues do.”
In part of his presentation, Perkins addressed various city funds, ranging from the main General Fund to more specialized funds, and different budget figures.
He provided a brief breakdown on department budgets, including administration, finance, information technology, planning, police and fire, public works, parks services, engineering and human resources, explaining reasons for increases and decreases, such as frozen positions or a $45,000 agreement to bolster security for the IT department after a ransomware attack.
Two departmental increases were for Paducah police and fire. The departments’ proposed fiscal 2021 budgets are $10,801,375 and $9,313,245, respectively.
“The police and fire — they make up a little over 50% of the general fund,” Perkins said. “They both are up. PD went up 5.5%. Fire is up 3%. Those are primarily driven by the recently agreed to — last February — bargaining unit adjustments. As you know, we’ve tried to become more competitive with agencies that are like size in our area.”
The city plans to do a review, or evaluation, after six months on its fiscal 2021 budget projections for potential adjustments. Perkins explained it hopes to have a “pretty good idea” by around February.
“We just are very hopeful that, within six months, that we have been ultraconservative and we just did just a such tight job on this that we’ll have money everywhere,” he said. “I don’t expect that’s going to happen. I hope it does. But at that point in time, we’ll come back to city commission with ideas on how to restore some things, but we wanted to be very careful on how we move forward because once it’s spent, we cannot un-spend it.”
Paducah’s fiscal 2021 budget ordinance is planned to be introduced June 9. The budget adoption is expected to take place at a June 24 called meeting. The new fiscal year starts July 1.