Mayor Don Wesely today placed a moratorium on the use of city funds reappropriated from prior fiscal years until at least October 1, 2001 due to lower than expected sales tax revenues. Department directors have previously been able to request the Mayor's approval to use savings from the prior fiscal year to make one-time expenditures.
"This moratorium is a precautionary action to help ensure that if sales tax revenues continue to be lower than estimated, the city does not overspend," Wesely said. "If necessary, the reappropriated funds can be used to make up for lower sales tax revenue.
"Since the sales tax is such a significant portion of our city revenues, any further slowdown in collections would threaten the city's ability to meet future revenue projections and could result in a quicker than expected drawdown of our fund balances," Wesely wrote in a memo to directors and the City Council. "The moratorium will allow us to analyze two more months of collections before deciding if further precautionary steps are needed."
Wesely said further steps could include an extension of the moratorium or establishing a hiring freeze.
City Budget Officer Steve Hubka said net sales tax collections have leveled off, increasing just 1.56 percent over this time last year. He said the increases in revenue are much less than previous years because of a slowdown in the economy and relatively high refunds through Legislative Bill 775, which offers tax credits for job creation.
The city's fiscal year runs from September 1 through August 31. The City Council is scheduled to adopt the city budget for the 2001-2002 fiscal year today. The tax-funded portion of the budget totals $110.6 million. The budget includes a 2.9 percent decrease in the property tax rate and an increase in the telecommunications occupation tax from 3.8 to 5.5 percent.