Finances were front and center at the Fayetteville City Council annual retreat Monday. A preview for the upcoming budget amendment in March included a continuation of falling revenues and numerous cost cutting measures. Among those were the ongoing voluntary 2.25 percent salary cuts for managers and directors and an employee-initiated reduction in hours worked ranging from 2-8 hours per week.

Addressing cost saving measures for the remainder of FY 2009 that ends July 31, Finance Director Lynn Robinson said a couple of city employees suggested voluntarily reducing their work hours as a way of helping save the jobs of coworkers who might have to be cut if economic conditions continue to worsen.

Robinson said that, to date, 25 employees have reduced their schedules, with 16 of those coming from the Water Department. The voluntary reductions range from two to eight hours each week and are projected to save approximately $50,000 through the end of the fiscal year.

Another savings measure already enacted is a 2.25 percent voluntary reduction in salary by senior managers and directors through the end of the fiscal year. And there is more.

Also contained in the proposed budget amendment is the continuation of the hiring freeze that began a year ago. The number of budgeted positions at the beginning of the FY 2008 budget that began in August 2007 totaled 163 full-time equivalents.

The 2008 hiring freeze put seven of those on hold, with another 11 proposed to be frozen, for a total of 18.

And allowing for the firefighters hired last year and paid under the safer grant, the actual number of employees paid through the city is proposed to total 145.

If amended in March as recommended, the continued hiring freeze will save $143,000. The amendment also includes no cash payment for annual leave and a savings of $78,200 from the early retirement incentive program instituted in late 2008.

Other expenses proposed for cuts or savings include discontinuing contracted cleaning services, decreased Planning and Zoning professional services, decreased legal services, decreased jail costs in municipal court and no out of state budgeted training or travel.

In most ways the situation in Fayetteville mirrors other communities across the nation. The name of the game today is how to weather a mounting recession. In Fayetteville, tax digest growth is far lower than any year in more than a decade.

Local option sales tax (LOST) revenues are down an estimated 9.35 percent over calendar year 2007 and are projected to decrease another 4 percent in 2009.

Home foreclosures totaled 150 for 2008. General Fund revenues are projected to decrease nearly $273,000 by the end of the FY 2009. The unreserved fund balance shrank from over $1 million in 2007 to $635,000 in 2008. Water & Sewer Fund revenues will likely fall by $1.4 million. And revenues associated with construction such as impact fees and the sewer proportionate share are in the tank.

City Administrator Joe Morton prior to the financial discussion laid out the scenario facing the city.

“There are a lot of assumptions and recommendations for the amended budget for this year and coming years,” Morton said. “2010 will be particularly challenging.”

City forecasters said they expect little growth in the property tax digest for the remainder of FY 2009 and none in FY 2010. Projections showed growth inching up to nearly $32,000 in the black in FY 2011 and increasing further to $75,000-80,000 in FY 2012 and 2013. Digest growth slowed in 2008 to 3.94 percent. That figure compares to an 8.19 percent growth in 2007 and 8.64 percent in 2006.

Fayetteville’s low mark during the past decade came in 1999 with a 6.57 percent increase while the high mark came in 2001 with 15.48 percent growth.

From all available accounts, the recession will leave its mark even in 2013.

“In the fifth year of the forecast we don’t even get back up to the 3.94 percent digest growth from 2008,” Morton said.

Similarly with LOST revenues, the projected shortfall of $338,478 for the remainder of FY 2009 could increase by 1 percent, or $21,559, in the black in FY 2010 and even further to more than $43,000 in FY 2011 and up to a 3 percent increase, or $68,142, in FY 2013. As for the situation today, current LOST revenues have effectively put the city back where it was in 2003-2004, Robinson said.

The effect on personnel and major purchases during the 5-year period was clear. Current calculations include no new personnel and no new or replacement capital outlay in the general fund for those years.

Also proposed is no increase in salaries and benefits at least through FY 2010 and the potential in 2010 for a temporary suspension of the city’s match in the 457 Deferred Compensation Plan.

In their various statements throughout the discussion on finances, Robinson, Morton and Mayor Ken Steele took the position that the figures used to make projections from now through 2013 were based on very conservative estimates.

“With this recession, nobody has a crystal ball,” Steele said.