PORTERDALE — City Council members took some steps Monday toward developing a three-year plan to bring the city out of financial straits, but without some deep cuts going forward the plan may not go far enough.
The city was asked to compile the plan as part of an ongoing forensic audit being conducted at the direction of the Georgia Bureau of Investigation. The city’s finances have been under investigation after it came to light last August that the city’s bills weren’t being paid. Over the course of the past year the city has learned that it faces a deficit of about $1.2 million, which is about the same amount as the city’s annual budget.
At Monday’s meeting, council members approved furloughs for all employees except police officers, cutting full-time employees to 32 hours per week.
Councilmember Tim Savage argued that Police Department expenses should also be reduced by eliminating three full-time positions, bringing the department to five full-time officers, including the chief.
Other council members disagreed, and the result was that Police Department staffing was set at six full-time officers. A part-time position and overtime pay were eliminated. Currently, only five officer positions are filled.
Savage noted that the Police Department is budgeted at about $700,000, the lion’s share of the city’s overall annual expenditures.
“I’m certainly sorry that our Public Works Department and other services we provide for the citizens have taken a cut, but I fear there are some other adjustments yet to come,” Savage said in an interview Thursday.
The council also voted to contract with the Newton County Tax Commissioner for collection of city property taxes. Porterdale typically collects only about 80% of taxes owed in a year, although it has budgeted collections at 100%, creating a $30,000 to $40,000 annual shortfall. In contrast, the county’s collection rate is greater than 90 percent.
Council members have said the city’s financial problems are rooted in “incorrect information” that was given to the city’s Budget Committee by former city manager Bob Thomson over the course of three or four years.
“The numbers we were given weren’t accurate,” said Savage. “We were basing our budgets and decisions on numbers that were plain and simple lies.”
Mayor Arline Chapman has said the GBI investigation has determined that Thomson did not personally profit from the use of city funds, but that funds were “inappropriately used by moving back and forth and violating rules and regulations for how funds are to be appropriated…”
Thomson resigned from his position last August.
Since then, city officials have learned that in 2019 the city unlawfully used $120,000 in Special Purpose Local Option Sales Tax revenues and improperly used $140,000 in Water/Sewer Enterprise Fund revenues to supplement the general fund. That money will have to be repaid to those funds. In addition, the city failed to pay more than $47,300 to the Newton County Water & Sewerage Authority and $20,000 to the Cornish Creek Water Fund in 2019 charges. The city has also been unable to pay for water or sewage treatment for all of 2020, totaling more than $63,000 for water charges and $55,300 in sewage treatment costs.
Furthermore, the city has a $273,000 deficit from 2018 and owes $193,700 in general fund expenditures in 2019 and 2020 for things like electricity, 911 dispatch services, consulting services, among others.
City Clerk Linda Hanna, who came on board in March, estimates the total needed to get the city back on track is $1,168,717, which would include $171,000 in reserves as recommended by the city’s auditor.
Porterdale budgets on a calendar year but so far has been unable to produce a budget for the current year. Savage said the city is already $125,000 over budget for the year, but he thinks the city could end the year with a balanced budget if council members “buckled down.”
“It takes us making really hard decisions, and what we did the other night was an attempt at making hard decisions and getting in line with the budget,” he said.
City officials said its auditor has asked for a plan that shows the city correcting its financial problems within 24 to 36 months. Toward that end, council members also approved increasing employees’ portion of health insurance premiums, freezing wage increases, eliminating overtime, ending the accrual of compensatory time, assessing city assets for possible liquidation, and freezing all capital expenditures in the general fund.
Savage said it is difficult to explain to citizens — who have paid their taxes and paid their water and sewer bills — how the city got in this financial shape. Still, he said, he believes the city finances can be corrected.
“It certainly is something we can do. It’s something businesses have faced before, individuals have faced before….the city can do it, but we owe it to the citizens to make the tough decisions and to educate the citizens on what has to be done,” he said.