ZEPHYRHILLS — Faced with the potential of an $800,000 to $1 million budget shortfall, Zephyrhills officials aren't wasting any time looking for ways to balance the 2011-2012 general fund.
The most obvious choices: layoffs, tax hike and fees.
None of the options will be painless, city officials say.
City Manager Steve Spina has already met with staffers, had brain-storming sessions, looked for help outside the city and on Monday night addressed the City Council about the doom and gloom. He concedes it's earlier than usual to get started on the budget process but necessary to avoid "hasty" decisions for the fiscal year that begins Oct. 1.
Because the city already operates lean, Spina said during a council workshop, staff layoffs are looming and residents will likely face cuts in programs and services, higher taxes and new fees.
The problem, of course, is the bleak economy, which has depleted revenue sources, Spina said. Property taxes are down, as are impact fees and connection fees because new construction has all but halted.
Next year's projected carryover fund, which makes up a quarter of the budget, is $188,000. This year, carryover made up $1.3 million of the $19.3 million general fund.
Spina asked the council in the coming months to consider dozens of ideas he outlined in a four-page memorandum, including a slight hike in the millage rate to recuperate $187,703 in lost revenues from property tax devaluation.
The city would need a rate of about 6.1 mills, or $6.10 per every $1,000 of assessed taxable property value, to collect the same amount as this year, Spina said.
Council president Jodi Wilkeson said homeowners should understand the need for the increase and it shouldn't be too jarring.
"The difference between 5.999 mills and 6.1 is less than $100 a year on a $200,000 home," she said.
With salaries eating up 43 percent of the general fund, the city's main operating budget, staff reduction appears to be necessary, including in police and fire positions. The hope is, Spina said, to do most of the cutting through attrition.
"We really don't have a lot of fat in personnel and in operating," he said, adding that they have already had staffing cuts through attrition in the past few years. "If we do make more cuts, they're really going to be felt now."
Council members say while they would like to avoid layoffs, it simply doesn't seem possible.
"With personnel being 43 percent of our budget, then we're kind of kidding ourselves if we don't think we're going to lose some personnel and level of service," said council member Lance Smith.
Spina is considering using Penny for Pasco funds to pay capital loans and purchases such as the police station and fire truck leases. The funds can be used for the capital and free up operating expenses, Spina said. This would save $232,000 annually for the Police Department and about $162,000 a year for the Fire Department.
Council Vice President Kenneth Compton was intrigued by that proposal.
"That puts us halfway home right there," he said.
"Yes, that puts us halfway home," Spina agreed.
Spina has also recommended reducing the proposed 4,000-square-foot library expansion by half, saving $362,000 and freeing up Penny for Pasco funds.
Another idea he floated is going to a "two-three'' staffing for the Fire Department, meaning instead of having three personnel per fire station, one station would have two and the other three. The savings potential of this move is between $60,000 and $70,000 Spina said.
Nothing seems to be off the table.
Spina has also proposed looking into new revenue sources, including implementing street light and hydrant fees for private property and subdivisions, charging a fire service fee (which includes tradeoff in millage rate, however), adding a stormwater maintenance fee, installing traffic signal cameras to ticket violators and selling off surplus property.
"That's a starting point," Spina told the council.