Editor:

Recently there have been a number of letters to the editors regarding the city of Fairhope’s financial shape.  Both mayoral candidates have discussed the subject. The monthly financial reports presented to the council are long and are not simple. The reports seem to use follow- or connect-the-dots accounting and are not at all transparent.

Fairhope operates on a 12-month fiscal year that begins Oct. 1 and ends on Sept. 30. Currently we are in Fiscal Year 2008 (FY 08), and the council has received 11 monthly reports of revenue and expense. The most recent report, August, shows that the General Fund (city), Gas, Electric, Water and Golf Funds have lost (more expenses than revenue) over $1,120,000. The August loss was over $800,000 and the five funds (noted above) have collectively lost money each month March through August.  The losses are a big part of the reason the Utilities have had to draw $2 million on their line of bank credit (June-Sept.) and the General Fund has drawn $300,000 on their line of credit.  This $2.3 million adds to the total of the City/Utilities debt. Even if the late property taxes are recorded as revenue in September, the five funds will show, in total, a loss for FY 08.

The General Fund (city) has relied on the Gas, Electric and Water utilities for financial support. The General Fund (city) charges the Utility Funds for administration and other services, in addition to transferring Utility profit to the General Fund. In FY 08, the Utilities have been between a rock and a hard place as their purchase costs of gas and electric power have increased and the needs/demands of the General Fund (city) have increased. For the first 11 months of FY 08, the three Utility funds have brought in over $6.7 million, but over $6.3 million has been paid or transferred to the General Fund. The Utilities have kept less than $400,000 of their income. Not much to maintain and expand the utility system.

FY 09 began Wednesday, Oct. 1. Recently, Mayor (Tim Kant) left in city councilmembers’ mailboxes the proposed budget for FY 09. The proposal was prepared and compiled by the mayor and administrative personnel, the council having no part in the budget preparation. The budget showed that the General Fund revenue would exceed expenditures by $34,505 and that the Utilities would have a profit of more than $700,000 after all charges and payments to the General Fund. This was the first time that the council saw the proposal. There has been no discussion of the proposed budget at our meetings and no date has been set for any discussion or vote on the proposal. It is presumed that at the next council meeting, Oct. 13, the proposed budget will be reviewed and voted up or down.  The city is operating without a budget until that time, and if voted down it will mean the city will be operating without a budget for the first time in years.

If the proposed budget is approved (voted up) a number of deficiencies will have to be addressed:

•Fuel costs for city vehicles have been reduced for FY 09 when in FY 08 the actual cost was higher than budgeted.

•The city landfill will be closed in May 2009; $355,000 for equipment and other costs will be required because of the change from the city to the county landfill. This amount is not in the FY 09 proposed budget.

•Sometime after Jan. 1, 2009, the new Recreation Center will open. The costs of new staff and other expenses are not included in the FY 09 budget.

•In the Corrections section of the Police Dept. proposed budget for FY 09, the cost of prisoner meals and expenses have been reduced 55 percent from the actual cost level of FY 08.

These are a few examples of costs and expenses that will occur in FY 09 but are not included in the budget for this year. The city’s financial situation is tight. The Utilities will be squeezed for every possible cent. The impact of this situation on city services and Utility infrastructure will seemingly demand added revenue. The mayor and council will have to work together, tighten “financial belts” and not add any new projects. There are ways to shore up the financial situation, some more tasteful than others. Everybody must recognize the situation, be educated and pull, as a team, in the same direction. We must stop the political tug of wars of past years and work together toward solutions to the numerous financial and other problems of the city.

Councilmember, Place 1

Fairhope