Mayor Jim Gray's administration presented a plan Tuesday to a committee of the Urban County Council that would eliminate a projected $11 million shortfall in the city's current-year budget without layoffs or dipping into the rainy day fund.
Highlights of the strategy to balance the budget include: saving $7 million by cutting spending at many city agencies by 4 percent; saving $2 million by leaving vacant positions open; and using $2.5 million in excess fees the city will receive in March from the Fayette County Sheriff and Fayette County Clerk's offices.
The city hopes not to tap its rainy day fund, as had been originally proposed by former Mayor Jim Newberry, because the move would be viewed negatively by bond rating companies.
Ryan Barrow, the city's budget director, said two ratings agencies had already downgraded the city's rating, which makes it more expensive to borrow money, in large part because of plans to use the rainy day fund.
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The city's budget for the current fiscal year, which began July 1, initially had a projected $15 million imbalance.
To make ends meet, the city planned to use several one-time sources of revenue, the largest ones being $5.8 million from the rainy day fund and selling $4 million in surplus property. Both of those plans have now been nixed.
Newberry's budget for 2011 also included a limited number of layoffs, unpaid furloughs for the mayor's senior staff and commissioners, closing two city pools and the Avon Golf Course, and no raises for city employees other than those in public safety.
Six government departments — law, information, finance and administration, social services, public works and general services — reduced their operating budgets an average of 9 percent.
Since then, city revenues have begun growing faster than expected. Revenues are projected to be up $5.5 million more than previously expected this fiscal year.
Also, expenses are expected to decline by $2.8 million more than previously projected.
"In January, we had something very nice happen: Four of the city's largest revenue streams were all up slightly," Bill O'Mara, director of the division of revenue, told the Budget and Finance Committee on Tuesday. "It's been a while since we've been able to report that."
The city collected $10.96 million in January, which was $1.45 million more than expected.
"I wish I could say one month makes a trend, but I'm not ready to make that prediction yet," O'Mara said.