Despite a tough budget year and increasing fuel prices, Gainesville's budget will still pull through with a surplus.

The surplus from the fiscal 2011 budget year will be used in the fiscal 2012 budget to fund several new police cars and the city's commitment to the grant that brought in new firefighters. The remainder will go toward road projects and increasing the city's management reserve from four weeks to six weeks of operation. Fiscal 2012 starts July 1.

"Because of the property tax uncertainty coming up, a lot of cities and counties have recommended having an operational reserve of even up to three months in these economic times," City Manager Kip Padgett told Gainesville City Council members as he presented the fiscal 2012 budget Thursday morning.
The $5 million extra largely comes from franchise fees, which staff members didn't expect.

"It was a pleasant surprise," Padgett said. "We won't know the exact figures until November, but what we're going to do is take about $1 million for capital projects and $700,000 for the SAFER grant that we must fund for the extra firefighters."

However, city departments will continue to keep a close watch on expenses.

"In these economic times, we're seeing signs of improvement, but it's still volatile with the fuel prices that can take it the other way," Padgett said. "Building permits and water sales are up, and we're seeing more revenue from fines and fees in Municipal Court, but we're planning for a 30 percent increase in fuel and power rates."

As property tax assessment notices go out today, city staff are still guessing what that means for property tax revenue.

"We're expecting a 9.3 percent decrease in revenue there, and that's our best guess. The appeals are the main uncertainty," Padgett said. "Property taxes are not our biggest source of revenue, though. We show a strong balance of 20 other revenue funds."

The city's budget is $26.6 million for fiscal year 2012, which is a 3.7 increase from the current budget year.

Early in 2011, council members asked city staff not to increase taxes but maintain service levels for the fiscal 2012.

"I have to say, after deep study and thought about the numbers, that in spite of an economic downturn, in spite of higher gas prices, in spite of lower revenue and in spite of a reduced tax digest, we still have a surplus, which is really manna from heaven," council member George Wangemann said.

"This is very unusual, and I understand there may be citizens who will complain about having a surplus, but on the other hand, they would criticize much more for having a deficit," he said. "I would much rather have a surplus than a deficit ... and this is a highly unusual thing to see in the state of Georgia at this time."

While Mayor Ruth Bruner and Mayor Pro Tem Danny Dunagan thanked the staff for keeping expenses low, council member Bob Hamrick asked about funding several capital projects, including 15 police cars and four motorcycles.

"I thought over half a million (dollars) for police vehicles was a pretty significant amount that we would expend for replacement vehicles," he said.

Other council members supported the move to replace part of the fleet.

"They haven't had a big replacement in years, and some of those patrol cars have more than 200,000 miles," Dunagan said. "It seems expensive, but once you equip them out with computers, that's how much it costs through the lease-purchase program."