(STILLWATER, OKLAHOMA / Oct. 10, 2016) — Like many other Oklahoma cities, Stillwater’s sales tax collection is trending down for fiscal year 2017. Rather than waiting, the City of Stillwater is already taking action to identify reductions in expenditures.
Melissa Reames, who became CFO in 2015, firmly believes that when revenues tighten, good government must become more innovative, so she is introducing the City to zero-based budgeting for FY18. In addition, she is now rolling it back and applying it to the FY17 budget to help address the projected sales tax revenue shortfall. Department heads are being asked to offer significant cuts to their departments’ FY17 budgets. “Based on the revenue trends, the recent and current expenditure levels simply cannot be sustained,” she said.
Zero-based budgeting requires that the budget requests be re-evaluated thoroughly, starting from a zero base. This involves preparation of a fresh budget every year without reference to the past. This process is independent of whether the total budget or specific line items are increasing or decreasing.
“To get there, we must first acknowledge that sales tax in Oklahoma most likely will not rebound any time soon, so evaluating current city expenditures now will allow us to budget better for next year when we anticipate that sales tax revenues will remain lower,” she said.
City Manager Norman McNickle said, “While the City of Stillwater has always been transparent and in compliance with state law, we want to make certain that staff is accurately budgeting for long-term and short-term plans—which are set by city council—that turn into services and programs for residents. This means re-evaluating the budget from zero each year, starting now.”
Zero-based budgeting is also in-step with the Stillwater City Council’s direction to reduce the City’s general budget reliance on transfers from the Stillwater Utilities Authority.
Until a revised budget for FY17 can be approved by the city council, McNickle has put a freeze on hiring in all areas except for public safety and utilities. The City Manager’s team is also closely scrutinizing all travel expenses and capital projects.
As part of the new budget philosophy, staff is also being asked to look at leveraging revenue streams. “We need to make sure our fees are where they should be, and that we are looking at all available grants,” Reames said.
Sustainability of programs and services will be a large part of the budgeting overhaul conversation. “Given the magnitude of the reduction in revenue, it would be unrealistic to believe that cuts could be made without adversely impacting programs and services,” McNickle said.
Police, fire and utilities will be expected to be as lean as possible without reducing the current levels of service, but the expected cuts in other areas will very likely result in either reduced levels of service or elimination of programs.
Reames said, “Once we reset our base budget to match the anticipated revenues, city council will be able to accurately allocate expenditures that can be supported. It’s a process that is prudent, forward-thinking and smart.”
The City will be posting the FY18 Budget Process and Timeline on its website, stillwater.org, soon.
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