By TOM TIGANI
Sunday Times Newspapers
SOUTHGATE — While a recent auditor’s report confirmed unexpectedly positive city finances last year, officials here say the road ahead remains a challenge.
About $200,000 was saved from the 2009-10 budget, according to the report from Plante & Moran, which auditors said was noteworthy in a time of declining revenue and increasing costs. Officials had expected to break even.
But the savings — which comprises less than 1 percent of about a $25 million overall budget —is only one of two stories, Mayor Joseph Kuspa said.
“It’s important to understand that $200,000 is 1 percent to the good, but in terms of our fund balance, adding $200,000 is minor,” he said, pointing out that the fund balance, which now stands at about $1 million, is used basically for cash flow purposes.
And despite the savings, cuts of even larger magnitude had to be implemented. Contracts with city employees had to be renegotiated this year in order to save an additional $1.6 million.
“In one year we were up $200,000, but the very next year had to cut $1.6 million,” Finance Director David Angileri said.
“What we did in 2009-10 was validated,” Kuspa said of the auditors’ report. “2010-11 is a new day in which we had to cut $1.6 million.”
He said because the city is in a situation where it relies on property taxes and state shared revenue, Southgate, like other municipalities, is facing a double whammy this year. Declining property values will start showing up as decreased revenue because of the two-year lag in collecting taxes, and state revenues also are down, which most expect will negatively affect state funding to local governments.
“We’ll have a shortfall for several years,” Kuspa said, adding that auditors have said that even with modest economic growth, it could take 10 to 12 years to equal last year’s tax collections.
“Even if the economy took off,” he said, “it’s … something we’re going to have to look at for the next decade.”
In the near term, much depends on what happens at the state level, but with a new governor and new Legislature set to start work in January, as well as U.S. Census data figuring into the mix, the mayor said it’s anyone’s guess what will happen next.
At the city level, Kuspa is pleased that in his first year in office, Southgate so far has been able to make budget adjustments through attrition rather than layoffs, largely because of employee concessions. He also thanked all city employees for their cooperation in the effort, saying that without their teamwork, the adjustments would not have been possible in such a difficult economic environment.
“Long range, we’re one step in toward rightsizing government,” Kuspa said. “The first chapter of our municipal financial crisis is ended, but the problem persists and will for some time.”