There is no doubt the city of Mobile is ending fiscal year 2013 in the red, but it’s not as bad as first glance suggested, according to City Finance Director Paul Wesch.
The city ended the 2013 fiscal year on Sept. 30 and at that time Mobile had taken in $4.6 million in revenue more than budgeted, a positive for the city. However, as of Sept. 30, the city was also over budget by $6.8 million in expenses.
At first look, it appears the city of Mobile closed 2013 with a $2.2 million deficit. Wesch said while the city did end the year with a deficit on Sept. 30, it isn’t actually that much.
During a Nov. 19 Council Finance Committee meeting, Wesch explained to City Council members where the city stood and why it isn’t dire.
“(Total expenditures and transfers) were budgeted at $209,892,000 and the actuals came in at $215,700,000 or $6.8 million almost $6.9 million over budget. However, there is an item that caused almost $1.8 million of that,” Wesch said. “There were two $900,000 overages in the transfer to the transit system (WAVE). In October, which is not part of this year, we are going to show a $1.7 million transfer from (Mobile Transit System).”
The transfer from the transit system did not occur in fiscal year 2013 so it cannot be counted in that year. However, it does in effect take the deficit from $2.2 million to $500,000.
“Essentially the payment and repayment was split between two fiscal years,” Wesch said. “The deficit is actually around $500,000 and not the $2.2 million.”
Wesch had more good news for the councilors.
The early numbers for October show sales and use tax revenue to be $1 million more than budgeted. The expenses are also down by $2.4 million, but that is something that should be taken with a grain of salt Wesch said.
“The books are supposed to close at Sept. 30, but what it appears, which is not unusual, is that some October expenses were paid in September. This is not something that I expect will occur next month,” he said. “I don’t think this is a trend.”
Looking at Mobile’s financial future will begin in the first quarter of 2014 when Wesch and the finance department will start planning the 2015 budget, but that’s not all he wants to do. Wesch said he would like to give a three-year forecast so the councilors and city administration can begin formulating long-term plans.
“If the city needs to build up savings for a certain thing, then how will it do that unless it has a plan,” he said. “I think having three years will allow enough time to plan.”
July 31, 2015, might not seem like an important date, but it is for the city’s finances. That’s when the sales tax increase, which began in November 2012, comes to an end.
Councilman CJ Small asked Wesch how the city’s finances would be. While the finance director was hesitant to provide any specifics, he did say the national situation should be better.
“The national economy should be brighter and that should mean a better economy for the local level,” Wesch said. “There are things that could happen, but you can’t count on them yet.
“For instance, if the Internet sales tax bill passed, then that would mean an extra $200 million in revenue for the state. The city would stand to receive millions from that alone. You just can’t count that until it happens.”
The Nov. 19 meeting was the first of monthly meetings for the Council Finance Committee. City Council President Gina Gregory asked the finance and Public Services Committee to meet on a regular basis to monitor the city’s finances and infrastructure.