Westbrook has frozen all discretionary spending in anticipation of a $580,000 budget shortfall.
The city is adjusting its budget to account for lower revenues due to the slowing economy, according to City Administrator Jerre Bryant.
The primary shortages are expected to come from money raised through excise taxes and building permits.
Although city officials cautioned that the shortfall was just an estimate at this point, they said meeting a budget gap of the size projected could require significant cuts, including layoffs, salary reductions and the closing of fire stations.
In a memo to city councilors last week, Bryant said departments are working on cost-saving plans for the second half of the fiscal year.
“Even with the expenditure reduction actions we are considering, our budget gap for this year remains substantial,” Bryant said in the memo. “We will keep you apprised of other expenditure savings measures as we develop them.”
Before the city makes any major cuts, Mayor Bruce Chuluda said he wants to verify that the adjustment to the forecast is accurate. After that, he said, “everything’s on the table” – including cutting positions.
A nationwide recession, which began in December 2007, has been affecting budgets at all levels of government. A recent $27 million cut in state aid to local schools was part of an attempt to close a $140 million budget gap at the state level. The Westbrook School Department lost $414,000 from its budget as a result of the reduction in state aid.
In the memo to city councilors, Bryant said the city had budgeted for lower revenues this year, anticipating the slowing economy, but the economic slow down had been longer and more significant than expected.
The largest revenue loss the city is anticipating is in auto excise taxes, where the city is reducing its revenue expectations by $256,000, to a little less than $2.4 million. The city has reduced its forecast for building permits by $168,000, to a total of about $124,000.
City Council President Brendan Rielly said that if the shortfall is as large as Bryant is projecting, it’s going to take more than cutting discretionary spending.
“It’s a tremendous amount of money,” said Rielly.
Bryant said, in the memo, that the projected shortfall was determined by reviewing the municipal income over the past five months and looking at the projections of state and private economists.
Rielly’s suggested cost-saving measures the city could consider included halting all training for city employees, shutting down the Mechanic Street and Prides Corner fire stations and making across-the-board salary reductions.
“We need to look at everything,” Rielly said.
City Councilor Mike Foley, the chairman of the Finance Committee, is holding a meeting to review the second quarter spending on Thursday, Jan. 22, at 8 a.m. at City Hall.
At the review, Foley said, the city will be able to “get a picture of what we have for shortfalls,” which could help shape the spending plan moving forward.
Rielly said he is looking forward to that meeting, and hopes the city’s administration comes forward with a specific plan to cut back spending at that time.
If the numbers are accurate, Rielly said, he’s “not going to agree to spend anything unless someone can show me it’s absolutely essential.”
Rielly was true to his word Monday, when he voted against spending $25,000 on a study to determine problems with a portion of the Walker Memorial Library that has not been renovated.
Councilor John O’Hara argued that if the city doesn’t continue to move forward with projects and maintenance, when the economy does turn around, there’s going to be too much catching up to do.
Rielly was the only city councilor to vote against spending on the study.
Send questions/comments to the editors.
