Keating Report: mid-year 2015 forecast on government budgets and spending-Part 2

As summer starts, there’s some optimism among municipal leaders. In Alexandria, Va., Mayor William D. Euille (photo below on right) tells GPN: “Real estate sales activity appears to be improving, which is critical to our city’s tax base and a positive trend. We are carefully watching other economically sensitive sources of revenue, such as sales tax and business licenses, which have become more important as our share of funding from federal and state sources has declined over time.”

Alexandria’s recently approved FY 2016 budget include funding for increased enrollment in the city’s public schools and staffing of a new fire station, adds the mayor. The new budget, he says, “provides compensation to recruit and retain high-performing employees.” Alexandria’s population is about 149,000, according to the Census Bureau.

A major project is steaming down the track, says Mayor Euille: “We recently selected a location for constructing a new Metrorail station, which is a significant economic development investment for Alexandria, and a major transportation improvement in the Washington, D.C. metropolitan region.”

The Alexandria, Va., mayor offers this advice to local administrators: “In challenging times with limited economic growth, be innovative and inclusive in your approach to economic development, work force management and development, and solutions to public problems.”

Nationally, local government officials are still counting on federal and state funding to help balance city and county budgets. More than half (56 percent) of 313 respondents to an E-survey of GPN and American City and County readers expect their communities to get about the same or more funding from federal and state sources in 2016 (see chart above). In the mid-year 2014 E-survey, almost 59 percent of respondents expected the same or higher state and federal funding in 2015.

The numbers are looking good, says Johns Creek, Ga., Mayor Mike Bodker (photo below on left). Established in 2006, the city of Johns Creek is a suburb of Atlanta. It is the 10th largest city in Georgia and its population is approximately 83,000.  

“As the second half of 2015 approaches, our forecasted revenues will exceed budgeted revenues by approximately $2 million or 3.9 percent.  We are taking a look at how best to use this revenue,” Mayor Bodker tells GPN. “Do we use it to increase fund balance reserves or spend on needed infrastructure projects?  Or are there other areas to better direct this funding?” The mayor says he’ll ask the city council to address those questions in the future.

The mayor says one of the biggest financial challenges facing cities is the continued erosion of local sales tax revenues through exemptions. “A few years ago, Georgia passed a tax reform bill that has resulted in declining sales taxes for many cities. As they move into the budgeting process for the next fiscal year, cities will be analyzing the impact those changes have already made and will try to predict future revenue trends.” Mayor Bodker tells GPN that it’s possible many cities will be faced with unpopular choices of eliminating services or raising property taxes to make up for the shortfall.

Johns Creek, working with three other local, state and federal jurisdictions, soon will be building a pedestrian bridge over the Chattahoochee River. The bridge will link parks and trail systems between Johns Creek and Duluth, and will eventually connect with trails with other neighboring cities, creating a regional network.

Michael Keating is senior editor for American City & County and the GPN web site. Contact: [email protected]

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