Butler officials said the city is projected to spend more money than it will take in this year.

While the city expects to have enough money to cover that projected deficit, council members warned it could run out of money soon if its overspending trend continues.

“We have this conversation every year, yet we continue to run into the same problem,” Councilwoman Kathy Kline said recently at a meeting with a representative from the state Department of Community and Economic Development.

The city’s 2015 budget is $8.3 million, but its projected expenses will likely exceed that by a couple hundred thousand dollars.

City clerk Mindy Gall said the general fund had about $1.55 million at the end of July after about $6.3 million in revenue collections through the first seven months of the year and about $5.2 million in expenses.

Using the budget, Gall projected the city would get $2 million through the final five months, but said it is projected to spend another $3.4 million.

That would leave the city with just $219,000 in the bank at the end of the year, down from $427,000 at the start of this year.

The general fund routinely had at least $1 million in it to start each year from 2008 to 2012.

City treasurer Jeff Smith said his numbers show the city falling about $80,000 short of its revenue budget.

He said he used revenue comparisons of recent years to calculate what the city should expect to earn from September through December, instead of using the budgeted number.

Smith said his projections show the general fund balance could be gone by February 2017.

To prevent that, the city will need to find ways to trim its budget.

“Just because the city is a year away (from depleting its general fund) doesn’t mean the city can wait,” Smith said. “It needs to be addressed this budget cycle, not a year from now.”

Council acknowledged balancing its expenses has been a continuing problem for the city, which has spent more than it has earned in five of the past six years.

Last year the city spent about $116,000 more than it earned. It was more than $200,000 over budget for each of the two years before that, and was $511,000 over in 2011.

Looking ahead

City council on Sept. 2 met with Michael Foreman with the state department to discuss its budget and to get guidance on how to improve its financial status.

Foreman told council it needs to limit spending to the necessities: meeting payroll, debt expenses and operational expenses. He said the city needs to limit discretionary spending for items that are not needed.

“It is really the responsibility of council to say no,” he said. “The city needs to distinguish between what it needs and what it wants.”

Councilwoman Cheri Readie said the city is struggling to find anything left to cut or any additional revenue streams.

“We’re already at a bare bones budget,” she said. “We make cuts every year.”

Readie said the city’s labor contracts with its three unions representing nonuniform workers, police and firefighters make it difficult to find any expenses to cut, while the third class city code limits its ability to bring in additional revenue.

“Every year it is getting to be a more difficult budget,” she said. “But we’ll have to figure it out.”

Mayor Tom Donaldson said council will have to make tough decisions on what services to keep.

“We need to figure out how to cut things we don’t want to cut,” he said. “We have some decisions to make that might not be popular.”

Kline said the city can’t base its spending on what it has done in the past.

“Just because we’ve done it every year doesn’t mean we need to do it this year,” she said.

Councilman Richard Schontz said each department will need to look at items to cut going into next year.

Schontz said while the reserve money in the general fund is not part of the budget, it does help the city get through the first couple months of each year before tax revenues come in.

The city also depends on annual tax revenue anticipation loans to cover those costs. It’s loan was for $750,000 this year.

“(The projected) $219,000 won’t get the city very far,” he said. “That’s my concern.”

Overtime costs

Gall said much of the added expenses have come through employee overtime.

Through August the city has spent $51,000 more on overtime than it had budgeted for the year for the fire, police, streets and parks departments.

The fire department has $98,000 in overtime costs after the city budgeted $52,000 for the year.

The police department is $4,000 over its $65,000 budget, and the streets department is $9,000 over its $33,000 budget.

Donaldson said he has concerns about spending in the fire department brought on by the minimum four-man crew on duty and subsequent overtime costs.

However, that requirement is part of the firefighter’s collective bargaining agreement and would need to be mutually removed from the contract.

Kline noted that while the fire department’s overtime spending is higher than budgeted, the department routinely stays within its budget for the year.

Kline said the city has a responsibility to maintain public safety with both its police and fire coverage.

“If it is a question of public safety, you have to spend the money,” she said.

Council members said they hope to reduce spending in future contracts with its labor unions by developing more standardized benefits, but said negotiations have been difficult in the past.

Kline said the city has no money to offer to the unions while bargaining, so it is difficult to get them to give up anything.

“We have nothing to offer in return,” she said.

Contracts with the three unions expire at the end of 2017, but council said the talks with the unions need to begin soon.

Kline said the city may have to take baby steps in standardizing different benefits, such as health care coverage, across the unions.

Donaldson said he doesn’t know if the city has time to move slowly.

“We may have to make drastic decisions and stay with it,” he said. “We don’t have time here, financially.”

Increasing revenue

While cutting expenses has been hard for the city, finding alternative revenue streams has been even harder.

The city’s property tax is at 40 mills. While most of its taxes are at the state maximum limit, the city can increase its 7.5 mill debt service tax up to 10 mills.

However, council members said they are not in favor of a tax increase.

The city said it tried to get tax-exempt nonprofits to make payments in lieu of taxes, but had little success.

“Nothing significant changed,” Donaldson said. “We got like $200.”

Foreman said the city may look at adjusting its fee structure, but that likely wouldn’t generate substantial revenue.

The mayor hopes to sell police service to neighboring municipalities to earn extra revenue.

“I recently sent letters to four municipalities inquiring on their interest,” Donaldson said, adding the municipalities are East Butler and Summit, Franklin and Center townships.

Readie said the city could impose a $1 monthly fire hydrant maintenance fee on residents. However, the city approached Pennsylvania American Water with the proposal years ago and was rejected.

Donaldson said regardless of what changes, the city must find ways to cut spending and increase revenue.

“We have to quit doing things the way we’re doing it,” he said.