The city auditor says Marietta's general fund balance is expected to dip into the negative zone a year ahead of schedule, thanks to the lagging national economy.
"We've moved up a year from my previous forecast due to the economic downturn," auditor David Locke told City Council's audit committee during his annual five-year financial forecast on Wednesday.
In June 2008, he predicted that if the city's financial trends continued, Marietta's general fund cash balance would be nearly $400,000 in the red by the end of 2011.
But on Wednesday, Locke said that forecast had been accelerated, estimating that the general fund would begin 2010 with a cash balance of $1.1 million but would end the year with a deficit of $444,606.
If current trends continue, by the end of 2011, Locke expects the general fund could have a negative balance of more than $2.3 million. In 2014, that figure could grow to more than $11.1 million.
"This is just a forecast, but it's what I see if we continue to operate as we have in the past," Locke said. "The 2014 figure is absurd, we can't do business that way, but that's the cost if we continue to operate as we do now."
A revised five-year forecast of Marietta's general fund finances, presented by city auditor David Locke on Wednesday, shows the fund cash balance could dip into the red as early as next year if current city financial trends continue.
2009-Beginning cash balance: $2.2 million. Ending cash balance: $1.1 million.
2010-Beginning cash balance: $1.1 million. Ending cash balance: (-$444,606).
2011-Beginning cash balance: (-$444,606). Ending cash balance: (-$2.3 million).
2012-Beginning cash balance: (-$2.3 million). Ending cash balance: (-$4.7 million).
2013-Beginning cash balance: (-$4.7 million). Ending cash balance: (-7.6 million).
2014-Beginning cash balance: (-$7.6 million). Ending cash balance: (-$11.1 million).
Source: City Auditor David Locke.
He said salaries and benefits for the 129 city employees who are paid out of the general fund take up 83 percent of that budget.
According to the forecast, salaries will increase from $5.1 million in 2009 to $6.5 million in 2014, while benefits will climb from $2.9 million this year to $3.9 million by 2014.
"Did you include an estimate based on any savings the administration says they can achieve in the future?" asked Councilman Andy Thompson, R-at large, who chairs the audit committee.
Locke said he did not, noting that his projected general fund revenues and expenses were based on historical data and expected economic trends.
Earlier on Wednesday, Mayor Michael Mullen said the administration was aware of the city's financial issues and had already implemented activities aimed at saving municipal dollars, particularly general fund monies.
"We're trying to increase efficiencies and are continuing to work on a long-term financial plan for the city," he said. "Last year we shrank the budget by approximately $375,000."
Safety-service director Chad Presley said city efforts - including restructuring of departments; negotiating with unions without outside legal counsel; outsourcing residential permitting to Washington County; obtaining private, state and federal grants; hiring skilled summer workers through the Teamsters Union to do previously contracted work in-house; and other initiatives - have produced more than $3.6 million in direct and indirect savings for the city and residents.
"This results from opportunities we've taken as we continually evaluate our operations to find more efficiencies," Presley said.
Locke noted that although the city obtains several grants annually, those funds can only be used to pay for assets and not operations.
"And the bulk of the projected costs are for operations," he said.
At the end of Wednesday's meeting, Councilman Harley Noland, D-at large, said the city should be looking at ways to better the local economy.
"I hope we would work together to find ways to increase our population and revenues," he said. "We need to work more on encouraging people to move here which would increase our economy."