Gainesville’s director of administrative services and keeper of the city’s wallet, Melody Marlowe, spent 2009 watching city revenues closely, and making adjustments when needed.

Now, as she begins work on the Fiscal Year 2011 budget, which will guide the city’s spending from July 1, 2010, to June 30, 2011, Marlowe might be looking for another notch to tighten the city’s belt.

"Other than maintaining where we are, which is pretty flat right now with expenses and revenue, what we’ve got to contend with next fiscal year is going to be a decline in property values," Marlowe said. "And we’re expecting that to affect our property tax revenue."

To city officials, 2010 will bring yet another blow by the economy. Property values in Gainesville and the rest of Hall County will be reassessed based on their Jan. 1, 2010, values, which are presumably lower after a year of skyrocketing foreclosure rates.

"So these properties that have been in foreclosure and sold for much lower values than is on the tax digest, may be adjusted by the tax assessor to a lower amount, which means less property tax revenue," Marlowe said.

Property tax revenues grew, albeit only slightly, in Gainesville in Fiscal Year 2009, which ended June 30, and it was almost the only tax that did.

People spent less, and city sales tax revenues plummeted. A market for new construction virtually disappeared, and the city’s revenues from increased property values and building permits did, too.

Businesses closed, and the city collected less occupational tax. The stock market crashed, and the tax the city collects from investments and stock sales, intangible tax, did not even amount to $200,000 between July 2008 and June 30, 2009.

Franchise fees, or taxes that utilities that operate in the city limits pay based on their revenues from in-city customers, also declined in 2009.

"Gas prices have gone down in ’09 and that has a big part to do with it," Marlowe said.

At the end of June, the city’s reserves had dwindled to 2003 levels.

A recently released financial report blames much of the city’s revenue losses in Fiscal Year 2009 on the local decline in consumer spending; revenues from sales tax were more than $1 million less than in 2008.

"We planned on seeing it (sales tax revenue) picking up by now — that’s why we had to make these further budget reductions," Marlowe said.

In October, when the city’s sales tax receipts didn’t seem to be improving, city officials implemented furloughs, requiring all employees to take one unpaid day off each month until the end of June 2010.

The move was the last effort the city made in 2009 to cut spending to match revenue losses. Before that, the city tried nearly everything, from cutting pay raises to a hiring freeze and a halt on capital spending, to keep from allowing the economic conditions to impede on employees’ current take-home pay.

But the once a month furloughs, from November to June, will save the city about $400,000, Marlowe said, and hopefully keep the city in good financial standing, said City Manager Kip Padgett.

Padgett, who has been at the city’s helm for a little more than a year, said more furloughs may affect the city’s level of service, and that he hopes the cuts the city made in 2009 will carry the city through 2010 and through the rest of the recession.

And while that remains to be seen, Marlowe is optimistic.

"The city finances are still in very good shape; just because of the economy, we’re being very cautious," Marlowe said.