City seeks to address $1 million budget deficit

Port Isabel-South Padre Press

During a special meeting held to discuss a preliminary proposal of the 2015 -2016 fiscal budget, the Port Isabel City Commission learned the City is currently operating at a loss of more than $739,000 and is projected to have a budget deficit of just over $1 million.

“The City has had some challenges, some financial challenges,” said Interim City Manager Jared Hockema at the start of an extended presentation he gave detailing the City’s current expenditures and projected revenues.

“The current fiscal year that we’re in … we have a loss of $739,000,” he said. “This type of loss is not sustainable. We have to make some changes,” he said.

Hockema attributed the loss to chronic under-budgeting of expenditures while simultaneously over-budgeting expected revenues. “Our revenues were below what we had budgeted, our expenditures were high,” he said. “What can we really anticipate to collect? … What are we actually spending in the City?” he said.

This year’s loss is not an isolated incident, however. Hockema explained the City has run at a deficit for four out of the past five years. “It’s not a situation that developed overnight,” he said. During the 2010 – 2011 fiscal year, the City reported a budget gain of more than $133,000. In the years since, increasing losses have been reported, ranging from over $568,000 in 2011 – 2012 to the present day loss.

Before launching into a department-by-department analysis, Hockema explained to the commission that both short term and long term solutions can be explored to help rectify what he termed a ‘structural deficit.’

“If we can handle these issues over time, then it’s manageable,” he said.

Expressing some shock at the status of the City’s finances, Commissioner Juan Jose “J.J.” Zamora asked, “How could the auditors, the people in charge, have kept us away from these figures?”

Similarly, a resident stood up to address City Finance Director Rene Nava, asking, “How did we get to where we’re at?” The resident asked if Nava had received direction to be less than forthcoming with financial reports.

“I presented the reports,” Nava said.

“It’s not his fault. It’s the way we operated in general,” Hockema replied.

“We have changed what we’re doing to be more transparent,” Hockema said. “If we improve transparency, then we’ll stop some of these things from happening in the future,” he said.

Hockema urged the commission to consider short term solutions to try to stem the losses before enacting more stringent practices that would result in long term sustainability to the City’s finances. “Priorities are a matter of policy,” he said.

Chief among his suggestions were making temporary deferrals in the City’s capital expenditures, as well as delaying the filling of vacant positions. “The City right now puts aside about $500,000 … to fund capital expenditures,” he said. Those expenses include items such as road repairs, the purchase of police department patrol vehicles, and other purchases that have extended use or impact. “That’s how we’re going to get ourselves out this year, by reducing some of those capital expenditures,” he said.

In regards to vacant positions, Hockema explained the City should try to “use those vacancies to try to cushion this transition into absorbing this deficit,” he said.  Hockema added that an added benefit of not filling some vacancies would be creating a chance for the City to explore wage increases, especially for employees currently making minimum wage.

“What I’m trying to do is present a picture of what it looks like right now, how we’re operating,” Hockema said.

“I do not want for us to adopt a budget that has revenues that we are not going to bring in.” he said.

In other business, in a move that echoed the Laguna Vista Town Council, the commission voted unanimously to enter into a service agreement with the Boys and Girls Club of the Laguna Madre. Under the agreement, the City agreed to pay the Club’s utility bills, at a cost of approximately $5,500.

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