Council approves budget policy prohibiting budget deficits

May 7, 2010

By Tim Pfarr

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The City Council approved a new budgeting policy at its April 20 meeting that prohibits the city manager from bringing forward annual budgets that contain deficits.

A budget with a deficit is one in which expenses exceed revenue.

The city adopted budgets with deficits in previous years, including in 2008 and 2009, and the budgets used unused funds from prior years and assumed an increase in taxes to make up for the shortfall. The new motion requires that the city manager not rely on any use of unused funds from previous years or assume any tax increases when creating an annual budget.

The motion to pass the new budgeting policies passed 6-1, with Councilman Sonny Putter dissenting.

“I think this enhances the fiscal discipline in our own budgeting process,” Mayor John Dulcich said.

Councilman Bill Erxleben also praised the new policies, saying it is an example of zero-based budgeting. In zero-based budgeting, one prioritizes expenses and funds them as one can until funds have been depleted.

Putter said he felt the new policies were too restrictive for the city manager.

“I feel we’re unduly tying the city manager’s hands,” he said, adding that the city manager should be given a degree of flexibility when preparing a budget.

The new policy was brought forward by the Finance Committee, which consists of Dulcich, Erxleben and Councilman Rich Crispo.

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