FORT SMITH: Officials heal budget, shift wellness fund

5-0 vote sends $1.5 million to tax-shorted operations

— City directors confirmed Tuesday they will use the city’s overfunded health insurance program to bail out the underfunded general fund budget.

The ordinance directors passed, 5-0, states the city will reduce its contribution to the self-funded Health and Wellness Fund for the rest of 2010, redirecting about $1.5 million to be used as operating funds,according to a memorandum from city Finance Director Kara Bushkuhl. The health fund was budgeted to have $5.3 million left over at the end of the year, she said.

Directors Cole Goodman and Gary Campbell were absent for the vote.

Officials said the employees’ contributions to the fund won’t be touched and there will be sufficient money left in the fund to pay expenses.

Deputy city administrator Ray Gosack said the general fund has had an $800,000 revenue shortfall so far this year. That is because of less-thanexpected revenue from the city’s franchise fees and from the city’s portion of the countywide 1 percent sales tax.

The health fund contribution reductions would total $717,647 for the general fund, $70,588 for the street maintenance fund, $270,588 for the water and sewer operating fund, and $117,647 for the sanitation operating fund, according to figures in Bushkuhl’s memo.

The ordinance also directsthat eight of 10 vacant personnel positions remain unfilled in 2010, creating a savings of more than $353,000. The remaining two jobs, an accounting technician and a rate and finance analyst, will be needed beginning in September, Gosack said.

The jobs not being filled are in the police and planning and zoning departments and Fort Smith District Court.

The ordinance also calls for the canceling of meals for the Board of Directors for a savings of $1,700.

Gosack said using the surplus from the Health and Wellness Fund saves the city’s departments from making drastic cuts totaling nearly $2 million from their budgets.

Many of the cuts included travel and seminars but somecuts included large purchases, like $570,000 for vehicles and equipment for the Water and Sewer Department.

Gosack said that even though the cuts are no longer necessary, department heads have been warned to spend judiciously.

“We’re not out of the woods yet,” he said.

City directors anticipated making cuts last week before Goodman suggested using the health fund surplus to make up for the general fund revenue shortfall. The directors had noticed the surplus earlier this year and had planned to draw it down in next year’s budget. But Goodman suggested the drawdown be done this year to provide more operating money.

Northwest Arkansas, Pages 7 on 07/21/2010

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