Mayor Tab Townsell said at a meeting with department heads on Thursday morning that payroll cuts would be all-but-inevitable if the city is to restore its general fund reserve within 12 months.
After the meeting, however, department heads met in private to discuss a coordinated plan by which each department would cut as deeply as possible into capital and operational expenses in an effort to spare their employees from directly bearing the burden of restoring the city reserve.
After being briefed on the preliminary plans of his department heads on Thursday afternoon, Townsell said that he was "cautiously optimistic" that city officials would find a way to avoid payroll cuts.
Department heads are to present finalized cost-cutting plans by 9 a.m. on Friday, Townsell said, and the extent and feasibility of their collective cost-cutting measures will determine whether or not city employees will be looking down the barrel of pay cuts, mandatory furloughs or layoffs.
The Conway City Council will hold a special meeting at 5:30 p.m. on Friday and aldermen may, based on Townsell’s recommendations after reviewing department head plans, decide what form the budget cuts will take.
The need to cut 2010 general fund expenses had been suspected by city officials since Feb. 4 when the general fund reserve, figured by the city’s finance department at about $3 million in late 2009 and early 2010 while doing this year’s budget calculations, was found to have been misrepresented.
On Wednesday afternoon, the finance department had identified the actual amount in the general fund reserve to be about $1.2 million — $1.3 million short of the $2.5 million reserve Townsell said he considered "prudent." This $1.3 million shortfall, by Townsell’s order to department heads, will have to be made up over the course of about a year’s time.
The general fund’s departmental budgets break down to 20 percent operational and capital expenses and 80 percent personnel expenses. As the 2010 budget was written with no departmental growth and only bare-bones capital purchases, Townsell told the department heads Thursday morning it would seem impossible to recover the general fund reserve without reducing personnel costs.
Townsell briefed the department heads on what he would recommend as a remedy for the general fund reserve problem to the Conway City Council at a special meeting Friday: A 5-percent pay cut for city employees would save about $800,000 over 12 months and canceling the Conway Fire Department’s order for a new fire truck would save about $450,000.
The fire truck that would be canceled is one of two approved for purchase by the Conway City Council on Dec. 8 — one paid for through Conway Sanitation Department reserve funds and the other through a quarter-cent sales tax dedicated to fire department needs. The canceled order would be for the truck coming out of sanitation department reserves, Townsell said, but the money set aside from this reserve would still be added to the general fund reserve.
This move, in effect, would "cash in" the fire truck, though Townsell said this would be the full extent to which the sanitation department reserve could "come to the rescue" of the general fund reserve.
"We felt like sanitation’s reserve was so good we could take out of it," Townsell said, referring to the Dec. 8 council decision to purchase both the $450,000 fire truck and about $300,000 worth of patrol cars for the Conway Police Department. For the same reason Townsell said it was necessary to keep a $2.5 million reserve in general fund revenue, he said it was necessary to keep about $2 million in sanitation department reserve.
These measures would bring the general fund within $50,000 of Townsell’s stated "prudent" reserve of $2.5 million.
Over the course of the day, department heads contacted Townsell with their preliminary cost-cutting plans — none of which included cutting payroll.
"They think they can get to the number I need — to get to a 10 percent reserve — without personnel cuts of any kind," Townsell said on Thursday afternoon. "We should see (on Friday) how close they can get, but they thought they could pull out $850,000"
These are not the only options discussed at the meeting between Townsell and the department heads. City Engineer Ronnie Hall asked if it would be possible to levy a new Conway Corp. franchise fee on water and wastewater services, thereby spreading the burden of renewing the general fund reserve to the citizens of Conway.
Townsell said that he wouldn’t recommend this to the council. Given the economic and political climate, Townsell said it would surely meet great public opposition.
The departments that stand to be hit the hardest by the cuts are the city’s police, fire and parks departments. The street and sanitation departments both are funded through revenue independent of the general fund, and therefore aren’t directly affected by its reserve shortfall.
After meeting with Townsell, the department heads met in private to coordinate their cost-saving measures with the aim of cutting deeply enough into capital and operational expense to spare their employees from taking the burden.
Fire Chief Bart Castleberry said at about 2 p.m. on Thursday that he and his administrators were "still working on it," but that his department was willing to make whatever cuts in "everything other than apparatus and building maintenance" were needed to protect his firefighters from pay cuts or layoffs.
"That’s going to be hard to do, but we’re willing to make it," he said. "The biggest areas that take a hit will be training, and I’m a firm believer that you’re only as good as what you’re trained to be, but we’re willing to make some cuts there ... like not bringing in any outside training or sending anyone to outside training and doing a lot more training station-to-station (to avoid the fuel costs of driving fire vehicles to other stations). But then again, you want to do some company drills."
Parks Director Brian Knopp said that his department would be hit hard by Townsell’s mandate that vacant or newly-created positions not be filled, as his department has accumulated two vacancies and three new positions to keep pace with the new parks expected to come on-line.
"I think we’re going to look at reducing hours of operation at sports centers — maybe eliminate Sunday all together," Knopp said. We’re still trying to weed through everything ... and find what can we cut that’s going to have the least effect on the public."
Knopp said that another option would be reducing the number of Silver Moon Cinema events in 2010, and that some money would be saved by not having to staff the President’s Cup soccer tournament this year, as Conway was not picked for this tournament.
Chief of Police A.J. Gary had finished a meeting with his command staff by late Thursday afternoon and said that though his cost-cutting plan wasn’t finalized, it would include more in-house training to cut down on travel expenses and arranging officers’ shifts to cut down on the four hours of overtime per two-week pay period that came with the mid-2009 move to 12-hour shifts, though Gary said this shift arrangement wasn’t "locked in" as an option, because it would reduce the number of patrolmen on the street.