Covington shifts budgeting focus for new year

As Covington officials prepare the city’s budget for 2014 there is a shift in strategy for managing what is in the coffers.

As Covington officials prepare the city’s budget for 2014 there is a shift in strategy for managing what is in the coffers.

Derek Matheson, Covington’s city manager, in his budget message Oct. 8 to the City Council wrote in documents he provided to the Reporter that in recent years the focus during the budget process was on how to manage rising costs while revenue streams were flat or decreasing.

“For 2014, however, the focus is on how to manage increased revenues while realizing that the recovery is still fragile,” Matheson wrote. “While the temptations is great to create new ongoing programs, that strategy will cause fiscal issues down the road.”

Matheson recommended using the increased cash flowing into the city’s funds to cover one-time costs which are mandated or make the city’s operations more efficient.

And while the general fund looks healthy for the foreseeable future in the preliminary operating and capital budget for 2014, Matheson wrote, there are still challenges Covington officials will need to deal with regarding the streets fund and the parks fund.

A ballot proposition to raise the city’s sales tax from 8.6 percent to 8.8 percent — a move which could generate hundreds of thousands of dollars of additional revenue — was down by 38 votes as of Nov. 21. Matheson wrote that programs which would be funded by the passage of the transportation benefit district proposition were not included in the budget nor were possible cuts if the sales tax increase was not approved.

“The City Council would begin conversations on implementing a balancing strategy beginning with the upcoming council summit in early 2014,” Matheson wrote. “Until a decision is reached, the street fund would rely on fund balance and existing revenues for support.”

Meanwhile, the parks fund is on the watch list, Matheson wrote, even though it is balanced for the next calendar year.

“Parks, while breaking attendance records, still relies heavily on the general fund for support and this will not change,” Matheson wrote. “But, as long as the general fund can remain healthy then parks will be sustainable. However, we can’t grow the parks system without new revenue from the PrePAC process.”

Covington’s parks and recreation department staff is at the beginning stages of that process to form a Parks and Recreation Priorities Advisory Committee modeled on the Budget Priorities Advisory Committee which met in 2012 before offering a report which, among its recommendations, suggested forming a transportation benefit district in order to generate revenue to help pay for street projects. The sales tax increase was one of the options the TBD board — the City Council is the board — had to bring in money to pay for projects the city has not had money to cover due to dwindling revenue streams for the street fund. A PrePAC process could similarly examine ways the city could find long-term revenue stream solutions for the parks and recreation department’s programs and facilities.

Despite those challenges, Covington’s forecast for 2014 is considerably optimistic, particularly compared to past years. This is thanks in part to increases in cash flowing into the city.

“Retail sales continues their torrid pace,” Matheson wrote. “The Department of Revenue reports that retail sales are rising at the fastest rate since the late 1990s. That is evident in Covington where the city is currently forecasting retail sales tax to be 12.5 percent above 2013 projections.”

Covington began its budget process in June. Matheson suggested to department heads to consider six guidelines while making budget decisions: favor one-time costs, address imminent mandates, maintain what the city has now such as people, programs and infrastructure, implement the TBD if the proposition is approved, support the PrePAC process and achieve efficiencies through investments in technology and equipment. The City Council is expected to vote on the final budget at its Dec. 10 meeting, Matheson wrote in an email, after making one minor tweak based on input received from the council during a budget workshop Oct. 26.

Matheson wrote that the future allows for hope now where that was difficult in recent years.

“With the Great Recession in the rearview mirror, the city is positioning itself to move forward with new and exciting decisions,” Matheson wrote. “The economy is not quite on stable ground yet but still we see enough forward progress that we are replacing pessimism with optimism. The city is embarking on a journey which will cement its future for years to come.”