DAPHNE, Ala. — The Daphne City Council at its business meeting Monday approved its 2010 operating budget after voting 4-3 to adopt a budget deficit solution package that draws $584,990 from capital reserves but calls for no layoffs, pay reduction or decrease in overtime hours for city employees.

Councilwoman Cathy Barnette and Councilmen Derek Boulware and August Palumbo voted nay.

Facing a $2 million shortfall in sales tax revenue, Mayor Fred Small applied three rounds of budget cuts, and at a work session, said layoffs, furloughs and reductions in pay were the only options left.

The council avoided this by adopting an amended version of option three, which originally drew $673,569 from the general fund; uniform cleaning is deleted and employee recognition is reduced by $5,300.

The following cuts are included in the budget, along with their savings to the city:

Echoing previous statements made about not using capital reserves to operate the city, Boulware said “that reserve is there for a specific purpose and that purpose is not tonight.”

Boulware said the reserve should be available to help the city recover in the event of a natural disaster.

“We had two options: either use the fund balance draw or layoff employees,” Councilman Bailey Yelding said. “This fund balance draw will save jobs. There’s no other way to look at it.”

Barnette said the council could have spent more time assessing other means of raising capital, including deleting encumbered funds and decreasing training and travel budgets.

Barnette expects the city to examine its personnel structure in the near future regarding attrition, or not fillling positions as employees retire, quit or are terminated.

“I do not like to balance the budget on the backs of the employees,” Palumbo said, adding that he’s in favor of leaving positions open as opposed to laying people off.

“We need to look at attrition and unless something’s critical, not fill jobs,” he said.

Barnette, unsatisfied with the result, said she is pleased that city employees “have been spared this round but I don’t believe we have done enough to create a long-term solution to this problem.”

Seventy percent of the city’s budget — or $13.5 million — covers personnel costs; 15 percent pays for debt services.

The budget projects the city will collect $9 million in sales tax revenues in 2010, $4.5 million short of its payroll.

“All we did last night is buy ourselves time and defer the problem,” Barnette said. “The budget cuts I proposed in the work sessions may have only been a Band-Aid but at least there were cuts so that the shortfall wasn’t as large.

“As a council we must get a better handle on overall employee costs and determine solutions to the problem based on long-range needs,” she said. “We must look at our overall reserves, create projections and develop a plan accordingly.” 

Council President John Lake informed those present that businesses on County Road 13, at the edge of Daphne city limits, do not contribute to city coffers. Their sales tax revenues go to the Baldwin County Commission.

However, “They get the benefit of our infastructure,” Lake said, adding that the city would receive sales tax revenues from these businesses if the area were annexed into the city.

“If we want to improve our community, we have to grow a little,” Lake said.