The city of Hitchcock needs to cut operating expenses by $860,000 through service reductions and by eliminating staff positions in the police and street departments, a pair of consultants told commissioners Monday.
The reduction is necessary to keep the city out of the red, consultant C.B. “Bix” Rathburn said.
The city had planned to cover about $690,000 in operating expenses with fund balance money, but had only $390,000 available, Rathburn said.
Rathburn and fellow consultant Ron Cox blamed much of the city’s financial woes on inconsistent sales tax revenues combined with quickly rising expenses.
The two consultants backed a plan created by city employees calling for deep cuts across the board, including the reduction of some services and the elimination of four positions in the police department and two positions in the street department.
“But these changes can’t be maintained forever,” Rathburn said.
The city already had instituted a hiring freeze and halted capital projects, and would have to scale back scheduled road repair work, officials said.
The city in 2015 received about $2.38 million in sales tax revenue from the state comptroller’s office, records show. That number declined to $1.53 million in 2016 and down to $1.19 million in 2017, records show. That was about a 50 percent decline in two years.
“The property tax is pretty consistent, but sales tax is not what you need to be basing a budget on,” Rathburn said.
The severity of the city’s fiscal woes was reduced somewhat when city officials found a duplicate payment to a tax increment reinvestment zone and Cox suggested charging an administrative fee, Rathburn said.
Together those two changes accounted for about $920,000 in savings, Rathburn said.
“This has helped us see some immediate relief, but we still need to reduce this year’s and next year’s budget,” Cox said.
Hitchcock should eventually have about $3.5 million to $3.6 million in expenses in a given fiscal year, Rathburn said. Commissioners in Aug. 21, 2017, had approved a general budget of about $4.58 million in both total revenues and expenditures, documents show.
Mayor Dorothy Childress said Monday the city had its work cut out, but she was optimistic moving forward.
“I believe in the city of Hitchcock, our people and our future,” Childress said. “The new financial processes and disciplines discussed tonight by the city commission will serve as the foundation to a stronger Hitchcock for the next generation,” she said.
Commissioners on Nov. 7, 2017, authorized Mayor pro tem Randy Stricklind to negotiate a deal with Rathburn to review the city’s organizational structure, financial operations and planning that would clear up some of the financial questions.
The cost of Rathburn’s $15,000 contract was eventually paid for by the city’s Industrial Development Corp., Childress said.
Commissioners did not take action on the proposal.