PARKERSBURG -Faced with a multimillion-dollar shortfall from declining revenue, city officials are being pressed to come up with a solution - and fast.
The city is facing a $2.5 million revenue deficit and Mayor Bob Newell and other administrators are looking to find ways to climb out of the hole.
Newell met with The Parkersburg News and Sentinel Tuesday to outline the situation and potential solutions. While Newell discussed ways to offset the lost revenue, he made it clear the decisions would ultimately be up to city council.
Parkersburg Mayor Bob Newell discusses the city’s financial situation Tuesday. The city is facing a $2.5 million deficit and Newell and other city leaders are working on ways to climb out of the hole.
"I'm the one telling them they have to do something," he said. "It is not their fault, but it is their responsibility."
Councilmen will meet this afternoon as the Revenue Enhancement Committee to consider ideas.
Newell plans to submit options and recommendations to the committee. Among those options: a utility tax; raise police and fire fees; a user fee; raise B&O tax; increase the amount employees pay for health insurance; cut the automatic longevity pay raise for employees; make additional budget reductions.
Loss of tax revenue from St. Joseph's Hospital going nonprofit is $1.2 million a year.
Total budget shortfall because of economic conditions is $2.5 million.
Health insurance premiums the city pays for employees is about 11 percent of the $22.692 million budget.
Possible sources of funding, besides cuts to the budget, include a utility tax, a user fee upon all workers in the city regardless of residency and increases in fees.
While all are viable, Newell is opposed to raising police and fire fees or a utility tax.
"Business pay the lion's share of taxes," he said, referring to property taxes and B&O taxes. "I don't like putting more on the backs of businesses. Businesses alone clearly cannot continue to be responsible for the bulk of fees and revenue coming into the city."
Personnel wise, Newell said the city has already eliminated at least 15 support positions. He's hesitant to eliminate more.
However, the elimination of longevity pay and an increase in employee health care contributions might be an avenue favored by council. The city pays around $9,243 per employee for health insurance, which accounts for about 11 percent of the city's $22.692 million budget.
A user fee could generate from $2.7 to $3.5 million, depending on the amount of the fee. A $3 a week user fee would cost anyone working in the city $156 a year.
Officials calculate the city has 22,500 people who work within the city limits.
Council has pulled almost $500,000 from the capital reserve fund to cover shortfalls in the 2010-2011 budget, but the fund was never intended to balance the budget.
Almost half of the $2.5 million shortfall is the anticipated loss of $1.2 million in B&O and property taxes after the for-profit St. Joseph's Hospital is purchased by the nonprofit West Virginia United Health Systems.
Coupling the St. Joseph's loss in revenue is lesser B&O Tax revenue because of the economy, Newell said.
"Something will have to be done immediately," he said. "We are spending reserves now."
In June, the Revenue Enhancement Committee received a breakdown of fees and revenue generated by surrounding cities. Officials reviewed a list of potential fees and taxes (police and fire, cemetery, amusement tax, motor vehicle registration tax).
Some committee members took notice of a private liquor club fee, which generates more than $400,000 for Huntington. Most discussion centered on a user fee and a utility tax.
Finance Director Doug Life said a user fee would generate about twice as much as a utility tax, but a utility tax would apply to all city residents. A user fee affects only those who work in the city.
Charleston, Huntington and Weirton each assess a user fee on workers inside city limits. Charleston has a $2 user fee. Huntington recently increased its city user fee to $3.
The utility excise tax is imposed upon every purchaser of a public utility service for the privilege of purchasing, using or consuming a public utility service within the city limits. Utility service includes, but is not limited to, telephone service, electric service, gas service, motor carriers, garbage haulers and water service.
Charleston, Huntington, Morgantown and Wheeling each have a 2 percent utility excise tax. Williamstown and Vienna also charge utility tax. Parkersburg is the only major city in the state without a utility tax and one of only a handful of large cities in the state without a user fee.
Newell acknowledged the revenue enhancement will not be well-received, especially in light of recent boosts in fees for sanitation and water. The mayor also plans to hold a town hall-style meeting Tuesday evening at the city building to discuss taxation and city services.
He stressed whatever officials come up with to offset the declining revenue, it can not be a bailout.
"(Council) needs to get enough money to provide better services - to operate properly. So people can see where the money is going. We want to raise enough to provide better services."