What to do with an $1,000,000 surplus during a shaky economy?  The Decatur City Commission searched for an answer to the “good problem to have” last night, but couldn’t come up with a vote-worthy solution.

Though the roughly $70 property tax credit for Decatur residents was warmly embraced – and passed –  by all four members  of the Decatur City Commission last night (Mayor Pro-Tem Baskett was absent), the City Manager’s suggested “one-time pay period compensation adjustment” for staff was balked at by some members of the Commission.  (The $400,000+ leftover after the tax credit would be put back into the reserve fund)

Commissioner Keica Cunningham was the only member at the table who showed no hesitation in supporting the one-time bonus, which would cost the city $200,000.  Mayor Floyd seemed a bit wary, but eventually said that he thought he was “OK with doing this” if the commission was going to go ahead with a vote that evening.  Commissioner Patti Garrett gave no indication of how she would vote during the meeting.

The Commissioner with the most reservations about using the $200,000 for a one-time bonus was Fred Boykin.  Boykin, like all the commissioners, repeatedly praised the work of staff in keeping expenditures way down during the 09-10 fiscal year (over $800,000 below projected expenditures in the budget), but worried that “many folks out there” were struggling and that perhaps this was not the best time or the best economy to be giving bonuses.

City Manager Peggy Merriss defended the suggested increase by reiterating that neither the tax credit to residents or the potential staff bonus increase would have been possible without city staff’s continued efforts to keep costs down during the weak economy, and that without the bonus, staff would in effect see a reduction in pay from last year.

Mayor Floyd proposed that the Commission table the measure until the first meeting in November, when they would revisit it after further consideration.

Thanks to better than expected revenues and “strong expenditure controls by City employees”, the City of Decatur found itself roughly $1,000,000 in the black for the completed 2009-2010 fiscal year.

As such, City Manager Peggy Merriss is recommending that the Decatur City Commission pass a resolution at tomorrow night’s commission meeting that will provide a $70, one-time tax credit to City of Decatur property owners, which, if approved, will appear on late October’s tax bill.

According to Ms. Merriss’ note to the commission (page 22 – 23 of the meeting materials – pdf), the city’s audit revealed that revenues were $510,000 better than conservative projections, while expenditures were roughly $875,000 less than budgeted.  (To get the +$1,000,000, add the +$1,385,000 summarized in the previous sentence to the -$393,000 originally set aside in the 09-10 budget from the reserve fund.)

The one-time, $70 tax credit would “cost” the city approximately $360,000.  That in addition to a one-time “pay period compensation adjustment” for city employees at $200,000 and dumping the remaining funds back into the reserve fund (putting it back at its “prudent” max of 34% of annual operating costs – $6.4 million) accounts for all $1,000,000 in additional revenue.

According to the City Manager, this particular allocation “would recognize that the fund balance increase resulted from both additional revenues, including taxes, and from expenditure reductions managed by City staff.”