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DURHAM -- Their revenue projections trashed by the recession, city officials cut spending by about $10.4 million to make the fiscal 2008-09 budget come out balanced and avoid a major raid on savings.
The Police Department led the way for other city operations, leaving $1.1 million of its $45.9 million budget unspent, according to figures administrators gave the City Council on Thursday.
Other departments also chipped in. Unlike the previous year, none overspent their budgets, and eight recorded six-digit levels of saving.
Council members were pleased, and credited City Manager Tom Bonfield -- "Sgt. Carter" -- Councilman Farad Ali quipped, invoking the fictional Marines Corps disciplinarian from the old "Gomer Pyle" TV series.
Austerity moves became the rule of the day last fall after the Wall Street meltdown. Most of the city's sources of tax revenue fell off along with the economy.
The worst hit came in sales tax revenue, which the city government shares with Durham County and the state. It came in about $5.9 million short of expectations, Budget Director Bertha Johnson said.
Johnson also warned that officials are expecting fiscal 2009-10 to be just as tough, thanks in significant part to the General Assembly.
Analysts expect the city to lose about $670,000 from legislators' decision to divert into balancing the state's books much of the beer and wine tax revenue that would normally flow to local governments.
They're also expecting a hit from the decision to give real-estate developers a tax break by letting them defer property-tax payments on unsold homes for up to three years.
Johnson said tax collectors have warned that the city could lose $1 million to $1.5 million to the tax break.
More spending cuts could be on the way, but Johnson and Bonfield indicated that they're waiting to see how the first quarter of fiscal 2009-10 plays out before they make any suggestions. The second quarter begins Oct. 1.
Despite last fall's problems, the city was able to avoid dipping into its savings in ways that might jeopardize its credit rating.
Its policy is to keep a figure equivalent to at least 12 percent of general-fund appropriations in the bank, both to ensure a smooth cash flow and act as a rainy-day reserve. It likely finished the year with 12.2 percent -- about $20.5 million in cash terms.
The City Council, at loggerheads over property tax levels, in the spring of 2008 authorized administrators to take the fund balance down to 11 percent, to as little as $18.4 million.
Aside from the obvious recession-induced problems, the two trouble spots in Thursday's report were the bottom line figures for the Water Management Department and the city's transit operation.
Water Management -- which relies mostly on user fees and uses a separate bank account -- saw revenues clock in about $8.7 million below expectations, thanks to the effects of its new, conservation-oriented tiered water rates.
Officials believe the new system did prompt high-usage water customers to cut back on consumption. Bonfield said they also found that more people than expected qualified for the lowest-level rates.
The department cut spending to offset part of the shortfall but still ended up with a $2.4 million deficit.
The transit office -- meaning the Durham Area Transit Authority and a separate van service for the disabled -- also ran in the red and only balanced its books thanks to $1 million in federal economic-stimulus funding.
