A projected operating deficit for the city of Powell in 2013 may be reversed if historical trends hold up, officials say.
City Manager Steve Lutz said the budget gap could be explained by the conservative leanings of city officials.
"When budgeting, we tend to underestimate revenues and overestimate expenditures," Lutz said. "If history holds true, it will be the exact opposite."
The city ran an operating deficit just once in the past 16 years, despite regularly planning for a deficit. That occurred in 2010, amid the worst stretch of the recession.
Councilman Tom Counts said costs can be cut throughout the year when opportunities arise.
"Our actual expenditures for the last several years was less than our budgeted expenditures, so it's that management process over the year where Steve and (Fiscal Officer Deborah Miller) are watching things and choosing not to spend money in certain areas that allows us to end up with a balanced budget for 15 out of the last 16 years."
Regardless, the current budget projects an operating deficit of $594,000 in 2013, according to a draft that had a first reading at the Nov. 20 meeting of Powell City Council.
Expenditures are projected to grow to about $6.69 million, up from estimated expenditures of roughly $6 million this year.
Meanwhile, revenue is expected to drop to $6.1 million, down from about $7 million in 2012, though most of the losses are attributed to the absence of federal grant money received this year. Just about $178,000 of the decrease is attributed to other causes, namely the loss of estate tax revenue and reduced state funding, which will be nearly halved in 2013.
Accordingly, the city's projected carryover balance of $5.86 million for the end of calendar year 2012 could drop to $5.21 million by next December.
Overall, the city is projecting the budget to grow by about 10 percent next year, driven mostly by increased operating costs and a number of one-time expenditures.
Still, Lutz said the spending plan allows the city to maintain current levels of services, and he sees stability ahead.
"We've been in a fairly stagnant economic period for some time now, but we feel like we've stabilized," he said. "In the past couple of years, we've made significant cuts to the budget that helped us maintain a healthy financial position that we're currently in, and look forward to being in for years ahead."
The budget does include numerous one-time expenditures planned for next year, including $23,700 in election costs for the May 7 primary, when Powell residents will be asked to vote on a number of amendments to the city charter.
An additional one-time payment of $11,000 will go toward tax code revisions and an audit, and an extra $15,000 is budgeted for increased repairs to drains and sidewalks. The replacement of a worn-out bucket truck for the public service department will cost $120,000.
But the main drivers of the projected deficit are increases in personnel and operating expenses.
Rising health-insurance premiums will push up personnel costs by 6.5 percent, and increasing gas prices and other expenses will drive operating costs up about 22 percent overall, according to the budget report.
Some relatively small expenditures, such as a $7,000 redesign for the city's' website, are being delayed until 2014.
Officials anticipate upticks in a few revenue sources, including a 2.6-percent increase in expected income tax revenue and a small increase in property tax revenues.
Income tax is the city's largest single revenue source, accounting for roughly 70 percent of revenue to the general fund.
A second reading and approval of the budget is set for the Dec. 4 meeting of city council.