According to financial statements prepared by city accountant Burt Dukes, and presented at the Nov. 6 commissioners’ workshop, two of the city’s major cash funds have declined from the prior year, although overall, both the city’s water and wastewater fund revenues are projected to exceed expenses.

The biggest hit the city has taken is in its general fund, which consists of revenue such as transfer taxes and parking revenue.

While the general fund revenue exceeded expenditures by $1.1 million between April and September, the general fund cash has declined by $3 million since Sept. 30, 2008. The general fund is expected to decline by $697,000 by the end of the fiscal year.

Much of that can be explained by two factors, Mayor Sam Cooper said. First, the city’s transfer tax has declined from $2.1 million in fiscal year 2005-06 to $1 million three years later. Second, the city received $2.5 million in loan proceeds, which it invested in capital projects such as the Boardwalk reconstruction, among others.

City Manager Greg Ferrese said it is not uncommon for the general fund to be negative, but the water and wastewater funds have generally made up the difference.

While the water fund revenue did exceed expenses by $289,000 – excluding depreciation – between April and September, the water fund cash has declined $1.1 million since September 2008. Dukes said water fund revenues are forecasted to exceed expenses by $673,000 but after adjusting for principal payments, additions to fixed assets and proceeds from loans, cash outflow is projected to exceed inflow by $299,000.

The city’s water fund is going to be taxed in the next few years, Dukes said, because the city is due to pay back the loan it received for the Lynch well project. So far, the city has only been paying interest on that loan.

The city’s guardian angel, so to speak, is the wastewater fund. The fund’s revenues – excluding depreciation – are forecasted to exceed expenditures by $757,000.

After adjusting for capital outlays during the beginning of the year, cash inflows are projected to exceed expenses by $660,000.

Dukes said the city is forecasting $8.8 million in revenue after budgeting $10 million.

“That, basically, is the big hole in the budget,” he said.

The city has managed to cut its expenses by nearly $1 million after $896,000 in budget cuts this year.

Most of those cuts have been in capital improvements and part-time employees.

Cooper said the transfer tax is the biggest mystery of all for the city. It could either come in at $1.17 million, as budgeted, or $200,000 less than being forecasted.

Ferrese said he thinks the city will also bring in more rental tax revenue than budgeted.

“Being optimistic, if the transfer tax can come in at least $100,000 to $150,000 higher and if we can cut expenditures more, which I think we can, we could end up in the black. We still have six more months to work on this,” Ferrese said.

He said several projects the city completed last year – Lake Gerar Bridge, the new building and licensing office at 306 Rehoboth Ave. and the Boardwalk – all went over budget. However, the city has already paid off or is close to paying off these projects.

“Those are all in here and those will all be wiped out after March 31,” Ferrese said.

“What I’m saying is, if we can watch our capital improvements and continue to cut them, if these department heads can all decrease their departments by 5 percent, we’ll be all right.”

The commissioners’ next step is to identify new revenue sources, which they agreed to discuss at the Friday, Nov. 20 regular meeting.