Campbell projects positive cash flow
By Jeanne Starmack
CAMPBELL
The city is looking at a large, unexplained drop in income taxes and can’t quite project a balanced budget for the next five years.
Nonetheless, it is able to plan a route out of fiscal emergency.
“We’re getting close,” said Paul Marshall, chairman of the state oversight commission that is guiding Campbell through the fiscal emergency it’s been under since 2004.
The city’s latest five-year forecast projects a positive cash flow through 2014, Tim Lintner of the state auditor’s office told the commission at its meeting Monday morning. Lintner sits on the commission as a financial supervisor.
Marshall said there are two main issues that the city must deal with before it can request release from fiscal emergency status.
The forecast, which the state requires the city to have, needs to project a positive cash flow for five years, or through 2015.
The city also must switch its accounting practices to a system called Generally Accepted Accounting Principles.
Finance Director Sherman Miles said the city is buying software to upgrade to GAAP accounting. He said the software the city uses dates to 1986, and the state auditor has fined the city $750 a year for not having the upgrade.
The passage of a 3.5-mill levy in November is allowing the city to spend the $35,000 for the new software, he said. He said the city should be getting it sometime between February and April.
Marshall said he wants a status report on the switch to GAAP at the February commission meeting, calling the switch “the single-biggest issue left.”
The commission accepted the city’s 2011 budget Monday, a far cry from last year when it rejected the 2010 budget and its $463,000 deficit. The 2011 budget ends with an $80,000 surplus.
Marshall said he was concerned about some of the budget’s individual funds because it appeared as if they were spending more than they were taking in.
Those funds included the state highway fund, the permissive tax fund and the law-enforcement trust fund.
Miles said the money in those funds is not supposed to build up; it’s supposed to be used.
He said the spending is for one-time projects rather than for ongoing expenses such as personnel.
Lintner reported that income-tax collections, which have been lagging all year, are down $161,000 from where they should be at this time. That’s a drop from approximately $112,000, which was reported at November’s meeting. The city’s income-tax deficit had been holding steady between $110,000 and $112,000 for several months.
Marshall told Miles to check with the Regional Income Tax Agency, which collects the city’s taxes, to see why the revenues dropped.
He said that if the situation appeared to be only “a one-time thing,” it wouldn’t be as much of a concern.
Miles has said the bad economy is largely to blame for the drop in income-tax revenues. He said the city should finish the year down about $108,000.