DAPHNE, Ala. — The Daphne City Council at its meeting Monday discussed four options to balance a $2 million shortfall — with the main point of contention being how much capital should be drawn from the city’s reserves.

The talks will continue at the council’s work session set for Monday, 6:30 p.m. in the council chambers at City Hall.

After a series of cuts to nearly every department, the city must still account for $717,119.

“We can’t cut the budget anymore,” Mayor Fred Small said, adding that overtime, uniform cleaning and employee training need to be added back into the budget.

“The budget’s been cut enough,” he said. “The only thing left is layoffs, furloughs and reductions in pay.”

“There is more to tap,” Councilwoman Cathy Barnette said. “We’re talking about employees. We’re talking uniform cleaning or a layoff. If we can save someone’s job for three months, I think that’s worth doing.”

To help pay for debt services — and reduce the financial impact on city employees — Small suggested adding a franchise fee to Daphne Utilities.

Barnette disagreed with Small’s idea, saying she didn’t want the city to “take money from the utility in the 11th hour.”

The four options are as follows:

The following cuts are included in all four options:

“The budget deficit is a serious problem and one which the council has not taken lightly,” Barnette said. “We were presented with a $2 million shortfall which has required us to dig deep to find whatever funds we can to minimize the impact to our residents and our employees.

“The challenges are compounded by the mayor and department heads telling us there is nothing to be cut. They have worked hard to minimize expenses but we still are short $2 million.

“I am of the mentality that if we can save one person’s job then the line-item scrutinizing has been worthwhile.  The cuts we have made have been difficult: overtime, community sponsorships, uniforms, etc. But aren’t our city services and employees worth it?”  

Councilman Derek Boulware said he’s in favor of leaving the city’s capital reserve in tact to help Daphne recover in the event of a natural disaster.

“I think we need to keep the reserves in case of an emergency,” Boulware said.

The city has budgeted a projected $200,000 savings by switching to once-per-week curbside garbage pickup and participating in Team Green’s countywide recycling program.

Scaling back trash and recycling services would limit spending on utilizing and maintaining city trucks.

“There are differences of opinion among the council members on whether to use reserve funds for the operating budget,” Palumbo said. “I cannot predict which budget option will be adopted. I am reluctant to use reserve funds, as they are intended for capital projects and expenses, emergencies, and contingencies.”

The city’s personnel costs exceed 70 percent of the budget, which is too high,” Palumbo said. “Simply put, we have too many employees for a city our size. I do not advocate layoffs, but am strongly in favor of reducing the work force by the hiring freeze the council just put in place, and by attrition, not filling vacancies caused by retirements and resignations. I believe we need to do this for the next several years to bring Daphne in line with employee strength compared to other Alabama cities our size.”

Barnette said, “The long-term problem is that our personnel costs are too high for our operating budget.” Seventy percent of the city’s budget ( $13.5 million) covers personnel costs, and 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.

“Once we get through the budget process and hire the new human resources director,” Barnette said, “I hope we can task them with developing an employee succession plan and looking long-term at ways to minimize our total personnel costs.” 

Barnette added that she’d like the council at its work session Monday to review previously unencumbered funds that have yet to be allocated; the city has set aside funds for road resurfacing projects and building maintenance issues that have not been spent.

Barnette would also like to revisit cuts to the travel and training budget.

“The council also needs to be presented with our total reserves including what will need to be tapped this year to make up for our deficit,” she said.

“I think option three in some amended form will pass on Monday,” Councilman Ron Scott said. “No layoffs and no furloughs,” adding that he expects the council to “dip into the reserves about $500,000, plus or minus.”