CITY COUNCIL 'Tight' budget is approved

The city is setting aside much less this year for repairs and improvements.
By NORMAN LEIGH
VINDICATOR SALEM BUREAU
SALEM -- The city will complete the year with a conservative budget that calls for spending about $300,000 more than in 2003.
City council approved the nearly $4.9 million 2004 spending plan during a special meeting Monday after operating on a temporary budget since the first of the year.
"It's very, very tight," Councilwoman Nancy Cope, R-at large, and chairwoman of council's finance committee, said of the 2004 budget.
Stagnant revenues and increasing operating costs have city officials being particularly conservative.
The nearly 6.5 percent spending increase from 2003 to 2004 is largely the result of paying more in scheduled salary increases for employees, Cope said. It also reflects steeper costs in providing employee health insurance.
The city is projecting having to spend about $107,294 more in 2004 than it did in 2003 to insure its employees, which includes providing dental and vision coverage.
It costs about $330 per month to cover city employees on the single insurance plan. Those employees contribute nothing to the premium cost.
The monthly cost for employees on the family plan is $900, with employees on that plan paying $30 monthly toward the premium.
Income tax
Revenue from one of the city's primary sources, its 1 percent income tax, has stabilized after some decreases in recent years that were brought on by the nation's unsteady economy.
In 2003, $3.69 million was taken in through the tax. Projections call for about the same amount in income tax revenue to be gathered in 2004, Auditor Jim Armeni said.
In formulating this year's budget, city officials are bracing for the loss of about $60,000 annually in income tax revenue when the Eljer Plumbingware Co. plant closes May 31.
Nearly 250 employees work at the South Ellsworth Avenue facility, which the company says is being closed because of increasing manufacturing costs.
If all goes as planned, the 2004 spending plan will leave the city with about $200,000 to carry over into 2005 to pay bills early next year, Cope said.
She noted that in the early 1990s, the city's fiscal health was sound enough that it sometimes posted year-end carry-overs of more than $1 million.
Capital improvements
One area of the 2004 budget that contains a sharp decrease from last year is in capital improvements.
The city intends to spend about $901,824 less this year on capital improvements than it did in 2003.
The cutback reflects the city's belt-tightening and the fact that more revenue is being allocated for operations, Cope said.
Among the capital improvements slated for 2004 are street and sidewalk repairs, which are expected to cost about $223,000.
Another $121,000 has been earmarked to complete a project on the northeast side to widen and extend some side streets to ease congestion in the East State Street commercial corridor.
About $350,000 is being set aside to extend Cunningham Road northward.