The figuring going on in City Hall this week has arrived at a general fund reserve of about $1.25 million, which necessitates budget cuts, according to Mayor Tab Townsell. How deep those cuts will go and if they will mean lowered salaries or layoffs for city employees may be determined today.

The reserve was estimated as recently as last month to be about $3 million based on estimates provided by the city’s finance department staff. 

Townsell has explained that checking the status of the reserve, while not impossible, is complicated.

This is because there is no "reserve account" — no fund containing the reserve and only the reserve. The reserve, according to Townsell, commingles with the general fund as a whole. Deducing its value means tallying the various deposits and withdrawals from the general fund, and because these transactions are irregular and frequent, it’s always "a moving target."

A still-unanswered question remains: Other than the circumstances involving about $1 million in misplaced funds and one department coming in about $450,000 over-budget, which Townsell agreed seemed to be "genuine surprises," how did the reserve drop without notice to more than $1.8 million below the $3 million the council was briefed on and used when drafting this year’s budget? 

"So far we’ve only been focusing on how we got there, where are we at and what are we going to do about it," Townsell said.

According to information provided by City Hall on Thursday, here’s how the reserve went from $3.8 million on Jan. 1, 2009 to about $1.255 million today:

• For an as-yet-unknown reason, $993,000 in money generated by a Conway Corp. electrical franchise fee and dedicated to site work at the HP facility as per the conditions of Conway’s incentive package was inappropriately included in the reserve. It was discovered this week that this money "was just misplaced," Townsell said, and the error escaped detection by both city financial staff and independent auditors, leaving the reserve at about $2.8 million.

• The Conway Police Department came in about $450,000 over-budget in salaries. Chief of Police A.J. Gary said on Wednesday that this was partly because city funds intended to cover overtime weren’t transferred into his department, and Townsell said on Thursday that this blow to the general fund seemed to result from "miscalculations" both by finance staff, who initially set up the overtime account for the 2009 budget, and by CPD’s financial staff, who track and adjust the amount of funds to be requested for overtime over the course of the year.

• About $701,000 in general fund balance appropriations were approved by aldermen that believed the finance department’s estimate that about $3 million existed in the reserve balance. Chief among these was $140,629 spent for Christmas bonuses and $295,000 approved in June for the purchase of Springbrook financial software, though 18 other appropriations ranging from $66,541 for a parks department shop building to $3,350 appropriation to purchase an art hanging system for City Hall contributed to the general fund reserve’s decline to about $1.656 million.

• Sales tax revenue came in below projections. The 2009 budget was written on a projected 4-percent increase in sales tax revenue based on previous years’ performance. The economic climate dicatated otherwise, and sales tax dropped by 1.2 percent, resulting in a net drop under predictions of 5.2 percent, which equalled about $750,000 short of predictions. This was offset somewhat by a $300,000 "what if?" fund to about $450,000, dropping the reserve to its current $1.255 million.

(Staff writer Joe Lamb can be reached at 505-1238 or by E-mail at joe.lamb@thecabin.net. Send us your news at www.thecabin.net/submit.)