GULFPORT — Faced with a $3 million budget shortfall beginning in October, the city is slashing employee raises, leaving positions unfilled, and taking other drastic cuts to avoid raising residents' property taxes.
"My goal is to keep the millage rate the same and maintain the same level of service," Interim City Manager Jim O'Reilly told the City Council last week. "This is a survival mode atmosphere for the city."
Currently, the city's property tax rate is 3.4742 mills, or $347.42 annually per $100,000 of taxable property value.
Property tax revenues dropped 8.29 percent in 2008 and are expected to drop another 9.24 percent this year and yet another 12 percent in 2010.
For fiscal 2010, the city anticipates receiving $804,000 less to cover expenses in 2010.
City staff began working on the fiscal 2010 budget less than a month into the present fiscal year, anticipating that the city would be faced with sharply reduced revenues.
Since then, the national recession has slashed other economy-related income sources, such as the half-cent sales tax and state revenue sharing funds.
"This city is in very good shape financially. We have 43 percent (of annual expenditures) in reserves," O'Reilly stressed. "This is not a fire sale. This is for long term fiscal responsibility of city."
O'Reilly told the council he has already suspended city employees' longevity bonus payments and is negotiating with the police union to "considerably lower" cost-of-living and merit increases. He anticipates similar reductions will be made to general employee compensation and plans to reopen the city's contract with the fire fighters' union.
The city has frozen all hiring, except what is considered "mission critical" positions.
Unfilled positions include city manager, the police chief, a police sergeant, two police officers, a police department records technician, a fire lieutenant, the leisure services administrative assistant and a staff assistant in the administrative services department.
The city had already eliminated several library positions, as well as a fire captain, firefighter, maintenance worker, recreation coordinator and a clerical position in the city clerk's office.
One department that may be exempted from the hiring freeze is the fire department, which is required to maintain a certain number of firefighters and EMS employees on each outgoing truck.
"We are so lean in our fire department that we are a sickness or illness or injury away from not being in service," O'Reilly said.
The interim city manager also hopes to keep health and other insurance costs the same by renegotiating coverage.
He said the city's current subsidized employee health insurance is a "Cadillac" policy that may have to change.
"We may have a different product or we may have to reduce the subsidy," O'Reilly said.
While the council voiced appreciation for O'Reilly's early focus on next year's budget, Mayor Michael Yakes and the council were particularly upset over proposed cuts in EMS funding from the county.
"Making up the deficit is going to be a difficult process. We must look for most benefit and cause the least harm," said council member Sam Henderson.
The tentative budget is still nearly $500,000 in the red, O'Reilly told the council, including anticipated cutbacks in EMS funding normally provided by Pinellas County.
"We are going to get balanced, somehow," said O'Reilly. He plans to bring a revised budget back to the council sometime in June.