By Will Pafford, Staff Writer

An alderman on the Rollingwood City Council recently called a special Council meeting to address what he described as a deficit in the city’s budget and suggest curbing the city’s expenses.

Residents packed into City Hall on June 1 for the special meeting Alderman John Hinton called, with many sitting on the floor or standing.

Hinton made a motion for expenses more than $10,000 to require Council approval, but eventually withdrew his motion.

Hinton distributed a preliminary statement of revenues and expenses for May for the park department and public works sections of the budget.

In the statements, Hinton marked where revenue in the two sections came from internal transfers from the reserve fund, about $190,000 in the park department and $90,000 in public works.

He said this should not be considered revenue.

City Administrator Vicky Rudy said the report Hinton referenced was preliminary and not yet adjusted or corrected.

When reserve transfers are counted as revenue, it is difficult to see spending deficits, Hinton said.

This procedure also allows the City Council to spend every dollar the city has by transferring funds from the reserve fund to the general fund and still have revenues exceed expenses in the budget statement, Hinton said.

“We could spend every dollar and still have a balanced budget,” he said.

Hinton said the city transferred about $280,000 from the reserve fund and spent most of it.

“That’s a use and spending of our reserves, not a revenue,” he said.

By the end of the year, the city might have a greater real spending deficit that ever in the past, and it may have spent more reserves than ever in the past, Hinton said.

Alderman Bill Hamilton asked Rudy how much the city has in the reserve fund.

Rudy said staff is currently working on the projections, and they will be ready by the time the Council is working on the budget for next year, which will be completed by October.

“The true health of the city is what the ending balance in the reserve is going to be,” Hamilton said.

Alderman Brian Nalle, who was a member of the Council that passed the current year’s budget implemented October, 2008, said the city planned to spend reserve funds on projects such as the remodeling of City Hall.

Hinton said he was concerned about how much the city had transferred from the reserve fund and the fact that sales tax revenue is declining.

Hinton moved that no payments more than $10,000, whether previously approved or not, by the city or Rollingwood Community Development Corporation should be paid without Council approval.

Throughout discussion with Rudy, the city attorney and staff, Hinton subsequently amended his motion to exclude the RCDC and recurring payments, and have the motion only apply for the remainder of this fiscal year, which ends Sept. 30.

Nalle said the transfers from the reserve fund were for one-time capital expenditures, and the city’s operating expenses were not at a deficit.

Marilyn Kounnas said the Council should not change the budget in the middle of the current cycle.

“Respect the work of our previous Council,” she said.

Hinton withdrew his motion.

Hinton also proposed other cost-cutting measures such as eliminating a RCDC program that offers a grant to new businesses but eventually withdrew his motion to eliminate the program.

That program recently awarded $15,000 to Barshop & Oles, a commercial real-estate company, to bring Sprouts Farmers Market to Rollingwood, Rudy said.

Although Hinton had originally requested to discuss the city’s expenses for employees such as the city administrator, police and other administrative positions, he pulled those items from the agenda at the beginning of the meeting.

Hinton said he received a lot of information about payroll and city employees before the meeting and he wanted time to digest it.

Mayor Dale Dingley presented charts to explain city’s finances at the beginning of the meeting.

Dingley said revenue in all categories exceeds expenses.

Although sales tax revenue is less than the city projected when planning this year’s budget, property tax revenue will likely increase, he said.

“So budget-wise, we’re not in bad shape,” he said.