Carson predicts a $1 million budget shortfall by end of fiscal year

Expecting further loss of tax revenue with the closing of Kmart and negative effects from a possible war, Carson City officials said Thursday they predict up to a $1 million budget shortfall by the end of June.

City supervisors asked staff members to continue immediate measures put in place by interim City Manager Andy Burnham and to take further steps to prepare for the loss.

"The message is that we need to take action now in order to come in without spending reserves for this year," Mayor Ray Masayko said.

The city has $2 million in a "rainy day" fund, but officials are also looking at another $2 million budget deficit in the next fiscal year in the city's general fund, which totals about $19 million annually.

The city is facing heavy retail sales revenue losses with the departure of Wal-Mart to Douglas County. The move has contributed to steady declines in retail sales, which is expected to further drop when Kmart shuts its doors in April.

Finance Director David Heath told the board Thursday he had anticipated the 9 percent loss in sales reported for December but said the number could reach 13 percent when Kmart leaves.

Kmart brings in just under $500,000 in revenue for the city each year, Heath said.

Staffers were directed Thursday to begin assigning "essential or non-essential" designations to all positions. They were also asked to look at seasonal worker positions before hiring any new people this spring. Positions that are paid through user fees, like Latch Key, sports officials and lifeguards, should not be affected, staff said.

Burnham has taken several measures to slow spending before the end of the fiscal year. All vacant positions are evaluated and a determination made as to whether they will be filled.

The city recently suspended all general fund capital spending that has not been obligated, and limited all general fund services and supply spending to 8 percent of the annual total in each month, among taking other measures.

Masayko also pleaded with city staff to help save money.

"Please, please, please work with us," Masayko said. "It's going to make everybody's life easier. If you can hold a position open for six months, please do it."

Supervisors also were concerned about the looming threat of war with Iraq before the end of the fiscal year and what it might do to the economy, spending and the price of fuel.

Supervisor Richard Staub asked staff to analyze what the city spends on fuel and how the nearly 50 percent rise in the cost of gas will affect finances.

"Nobody can predict the future," Masayko said. "We need to be getting ready for (war). It is not going to be business as usual."

Thursday's budget discussions opened the door to the start of budget meetings for next fiscal year that begins July 1. The city is already estimating a $2 million shortfall for next year.

Department managers culled together a list of possible cuts last week totaling nearly $1 million. Cost-cutting measures suggested included closing the library on Saturdays and the public pool on Sundays.

Supervisors decided to delay the start of budget talks that were expected to begin mid-March, in order to allow city departments enough time to put together a plan. Supervisors said they would like to sit down with each department during the budget process.

The city must submit a tentative budget by April 15 and adopt an official plan by May 19.