Council reviews general fund

Pay increases scheduled

FAYETTEVILLE — Expenses in the city’s general fund are projected to outpace revenue in order to cover pay increases for employees, including police and firefighters.

However, the city should catch up in three years if sales tax growth stays steady, according to Chief Financial Officer Paul Becker.

The general fund makes up about 30 percent of the city’s budget. It mainly covers personnel costs but also includes material and supplies, services the city pays for, the library and parks activities. Water and sewer, streets, recycling and trash collection, the airport and parks development are not included in the general fund.

The City Council on Tuesday got a glimpse of the proposed 2019 general fund budget of $48.1 million. Revenue for the general fund is projected at nearly $47.4 million. That leaves a deficit of $746,000 for next year’s budget.

The adopted 2018 general fund budget was a flat $45.6 million.

General fund revenue

primarily comes from sales tax. Becker projected the city will end the year with $28.4 million in sales tax revenue, about 4.4 percent over last year. The 2019 budget projects nearly $29 million in sales tax revenue, which Becker conservatively budgeted as a 2 percent increase.

The city plans to dedicate about $1 million more to paying police and firefighters and about $822,000 more for the rest of its employees.

A market study last year triggered a lengthy discussion between administration officials and police and fire representatives. The study showed police pay trailed by 15.6 percent and firefighters lagged by 12.5 percent when compared to more than 20 similar cities in Arkansas and surrounding states. The rest of the employees fell behind by 11.5 percent.

Police and firefighters are on a step-based plan, meaning they get regular raises over time. Other city employees are on a merit system.

Activity-wise, police and fire make up 60 percent of the general fund budget. About $16.1 million is proposed to be dedicated to police next year, with nearly $12.8 million for fire. The next closest slice of the pie comes at about 13 percent, or $6.3 million, for finances and internal services.

Becker anticipated a deficit after a range adjustment for uniformed employees was agreed to last spring. Starting base pay for a police officer in the city is $36,723, and $34,561 for a firefighter, excluding holiday pay.

The general fund should have a balance of nearly $5.1 million in uncommitted money by the end of next year, on top of an $8 million reserve fund.If sales tax growth stays at 5 percent, revenue should catch up with expenses in three years, Becker said. The other 3 percent not included in the budget revenue projection should cover raises in springtime, he said. For years Mayor Lioneld Jordan’s administration has given out annual raises based on projected sales tax growth.

Other anticipated increases include new positions: a purchasing agent, a human resources recruiter and two part-time parks positions in recreation program assistance and for the Yvonne Richardson Community Center.

Area Agency on Aging of Northwest Arkansas is set to get $103,887 from the city, which is $5,000 more than last year. The agency, which operates the senior center, had requested $38,000 more, Becker said.

7 Hills Homeless Center also will get $5,000 more, bringing its amount from the city to $108,000. The center had asked for a $50,000 increase, according to Becker. The center’s Walker community is also included in the city’s capital budget.

As far as revenue outside sales tax, the city anticipates a little more than $1 million in alcohol taxes and licenses and $1.5 million in building permits, among other sources.

Property tax rates will stay the same.The council is scheduled to hold its overall budget discussion at 8 a.m. Nov. 17. The 2018 overall budget was just more than $160 million.

The city plans to dedicate about $1 million more to paying police and firefighters and about $822,000 more for the rest of its employees.