Danville's money management lacking

June 02, 2004

Dear Editor,

At the end of June, 2002, Danville's general fund balance was 4.69 million dollars. At the end of June 2003, the general fund balance was 3.86 million dollars. Recently it was estimated that our fund balance on June 30, 2004, would be 2.4 million dollars. What has happened to our money?

Some would blame this significant drop on the national economy. Others blame it on the loss of local factory jobs. I would suggest another possibility: Poor stewardship on the part of our city officials.

I would like to address the present budget dilemma in three areas:

1. Pay increases in recent years have been far too generous. The first example is that of the city manager position. The previous city manager (forced to resign under questionable circumstances) was paid $63,000 per year. The new city manager's salary is $82,000 per year plus benefits.


In reviewing the recent salary history of just seven of our "managerial staff," I find that their pay increased by 20.5 percent from fiscal year ending June 30, 2003, to fiscal year ending June 30, 2004, and it appears this year will bring them more increases.

The current '04 - '05 proposals provide for city workers to receive a 1.8 percent cost of living increase plus a "merit" or "step" increase of $350 per year. While a cost of living increase may be appropriate for some city workers, those who have had significant raises in the last two years should be excluded. Eliminating the "merit" or "step" increases will save $45,000 per year.

Many businesses in our areas have been forced to withhold annual increases in bad times. Surely, our leaders understand that sometimes this is necessary.

2. lnsurance costs that are part of our city's compensation package. The city pays the full cost of family medical coverage, including dental insurance for all full time city employees. Full coverage is also provided for the mayor and commissioners. The coverage for these five part time positions alone costs over $37,000.

At a recent budget workshop it was pointed out that many of the city's benefits are far more generous than that which is offered by the private sector. At Ephraim McDowell, the city's largest employer, the employees share the cost of the insurance program.

Employees at the hospital pay $2,340 per year for family coverage, with a higher deductible than the city plan, and dental coverage is not included. Can the community be expected to provide city employees benefits that are not commonly available in the private sector?

3. The planned emergency fund is too great. When Craig Butler released his audit of Danville's finances for the year ending June 30, 2003, he indicated that the "surplus cash ($3.8 million) would fund about 10.5 months' operations." On March 31, 2004, our fund balance was $2,949,958. This would equate to about eight months' expenses.

It the city is spending money at the rate estimated by Mr. Butler, there is no "cash flow" problem as has been suggested. Up until about 2002, the city was content to have an emergency fund of about 1.1 million dollars. There is no reason to have more than a million dollars in reserve.

The real problem with holding a large cash reserve is that it leads to careless bookkeeping. This is one of the problem areas identified in the auditor's report. This is a recurring issue. Too often in the past we have not known what our true month-end balances were.

The new city manager quickly identified how to create new revenue: A garbage fee, a storm water utility tax, annexation of factories. Your editorial of May 5 praised him for "shedding some light on our financial situation."

I would like our management team to address the issue of MONEY MANAGEMENT. Let's identify the mistakes of previous administrations and take the actions necessary to bring our expenses under control. Just like at home, no amount of income will ever be enough if we can't manage what we have.

Gordon S. Howe

Candidate for Danville City Commission

Central Kentucky News Articles