A multimillion-dollar surplus from Omaha's 2012 budget will help close a fiscal gap projected for next year, rather than shore up the cash reserve and golf accounts.
City finance officials made another item clear: A tax cut won't be part of Mayor Jean Stothert's proposed 2014 budget.
The City Council, with a 6-1 vote Tuesday, approved Stothert's request to move $9.3 million from the 2012 books to help balance next year's general fund budget. The remaining $1.2 million from the 2012 surplus will go to the city's contingent liability fund.
Stothert, in a statement, said the council's vote “is an important step towards balancing the budget without a tax increase.”
“We still have work to do,” she said.
During her mayoral campaign, Stothert drew a tough line on government spending and set goals of reducing city property tax rates and eliminating the restaurant tax.
But a Tuesday letter to the council from the city's acting finance director stated that “no levy decrease will be recommended” in next year's budget.
Stothert's use of last year's extra cash differs from what former Mayor Jim Suttle proposed this spring.
In May, Suttle's administration asked the council to place $3 million in the cash reserve fund, $3.5 million in its contingent liability fund and $560,000 in the golf fund. Suttle wanted to send the remaining $3.5 million to the 2014 general fund for basic city operations.
“So asking to transfer $9 million as opposed to the original $3 million is a big ask, but it does seem to have merit,” council President Pete Festersen said during Tuesday's meeting. Suttle had hoped to build up Omaha's savings to help bolster its credit rating.
But Stothert's administration, as it prepares next year's budget, is working to resolve a gap between city departments' proposed budgets and projected revenues that the mayor says is anywhere from $16 million to $20 million.
The new mayor's spending targets for the Parks, Public Works, Fire and Police Departments are close to their current budgets. After Tuesday's council vote, if every department met her targets, Stothert said, the city's 2014 shortfall would be close to $2 million.
The new mayor's proposal for the surplus, acting City Finance Director Al Herink told the council, is needed to “help maintain basic city services.”
The city owes higher-than-expected sales tax refunds for state business tax incentives.
Those payments contribute to the multimillion-dollar shortfall in this year's budget, and that trend is expected to persist next year.
“The new administration does not consider raising taxes as an option for replacing the revenue shortfall caused by future refunds,” Herink wrote in documents submitted to the council. Herink said a tax increase “may have been considered” by Suttle's administration to replace that money next year.
Such transfers are often a routine part of closing the books on a budget year, although council members voiced some skepticism about the amount of cash the mayor requested.
Stothert briefed council leaders on her proposal late Monday. Garry Gernandt, who hadn't been briefed on the proposal, voted against the measure after a failed effort to delay Tuesday's vote.
Festersen said several council members were reluctant to make the larger transfer from what was intended for the cash reserve. But he said they “hope this allows us to maintain basic city services such as keeping our libraries open and possibly adding more police to our streets in 2014.”
Councilwoman Aimee Melton also argued for the transfer.
“I do think that this is something that needs to pass today in order to give the mayor the ability to finalize the budget,” she said. “Any further delay of this could hinder her ability to balance the budget.”
In May, finance officials said the contingent liability fund — the account dedicated to legal settlements and cases in which the city is uninsured or underinsured — should hold a minimum balance of $4 million to $5 million.
The account held roughly $750,000 at the end of last year, officials said in May.
The cash reserve fund, which can be a rainy-day fund for fiscal emergencies, held roughly $4 million at the end of 2012. That fund could have legally held $12.5 million that year, finance officials say.
The golf fund operates seven city golf courses, the Finance Department said last month. Only three of the city's 18-hole courses are actually profitable.
Stothert's plans for next year's budget include a larger police recruit class to bring Police Department staffing to the level it's budgeted for this year. She also wants to lease new cruisers and find a way to fund updated police radio equipment.
Stothert's administration also is grappling with how to pay the Fire Department's expenses this year and next, many of which are mandated by a fire contract that Stothert helped negotiate.