On a split vote at a special March 26 meeting, the council chose to use $1.16 million from the town's $7.9 million reserve fund and $350,000 in parcel tax revenue to fill the projected shortfall in the current fiscal year. The vote was 3-2, with Kathy McKeithen and Jim Dobbie opposed.
The town is in a slightly better position than it was in February, when the council was faced with a projected revenue shortfall of over $2 million. Projected revenue is about $101,000 better than expected and expenses have been trimmed by more than $500,000, said Finance Director Louise Ho.
Projected expenditures for the current fiscal year now total $10.2 million.
More than half the projected shortfall — $1.1 million — is attributed to problems with the collection of the town's business license tax. The town is giving refunds to building contractors who were overcharged in the past two years, and had to strike an anticipated $425,000 in business tax income from this year's books.
Council members disagreed on how to make up for the rest of the projected shortfall.
Councilwoman McKeithen said she'd rather take only $686,000 out of the town's general fund reserves and make up the remaining $476,000 by deferring several large public works projects. Councilwoman Elizabeth Lewis said she would rather take the $1.1 million for the business license tax directly out of the general fund reserve as a "clear line item."
"We recognize we made a mistake in the past in collecting funds that shouldn't have gone into the general fund," said Mayor Jerry Carlson.
Despite the split vote on where to get the funds to close the shortfall, the council unanimously voted to approve the mid-year budget adjustments, which include $100,000 in additional spending for legal services.
Ms. Ho warned that her revenue projections are very conservative, and the town could end the fiscal year with a smaller shortfall than projected.