By Valerie Baldowski
vbaldowski@henryherald.com

McDonough officials said they need $862,591 more to operate next year than they did this year.

Monday, the McDonough City Council approved a 2010 budget totaling $10,537,891, compared to an amended 2009 budget of $9,675,300.

City Manager Billy Beckett said department heads have been underspending by approximately 13 percent, in order to stay under budget. McDonough’s ability to set a larger budget is due to strong governmental leadership, said Beckett.

“We have capable leadership of the mayor and council, a great finance director, and fiscally responsible department heads,” he said.

The increase over last year’s budget needs to be taken in context, said Beckett. Although the city began 2009 with a budget of $9,990,747, it was later reduced by $300,000.

“If you compare the original 2009 budget to the proposed 2010 budget, the increase is only 1.2 percent,” said McDonough Finance Director Bonnie Kline. She said the city was forced to amend its current-year budget because of slower than anticipated revenue collections, due to a severely depressed economy.

“I think they [city leaders] were overly optimistic when they did the 2009 budget,” Kline said.

Despite decreases in some sources of revenue, Beckett does not anticipate any layoffs of municipal employees. “[There are] none planned, barring an economic tsunami,” he added.

Anticipated revenues from property taxes for next year are $2,638,003, down from $2,700,000 for 2009, the budget shows. Kline attributed the decrease to the local housing market, and the economy.

“We project a slightly lower collection rate due to the number of foreclosures and general economic conditions,” Kline said. “We normally budget using a 97 percent collection rate ... For this year, we used 93 percent. Hopefully, this is one revenue source that we can revisit, and revise upward as we see economic uptick in the coming year.”

In 2010, the city hopes to collect $42,426 in residential and commercial impact fees charged to developers. The amount is down from $44,093 in 2009. Next year’s impact fees are an estimate, Kline said. “We’re seeing an increase in commercial development, so, hopefully, residential is going to pick up, too,” she said.

The city also expects a decrease in hotel-motel taxes next year. The projected 2010 revenue estimates are $385,000, compared to $433,000 for 2009. The drop is due to the economy, the finance director said. A rebound in that revenue source will depend on an economic turnaround leading to higher occupancy rates, she added.

Anticipated Local Option Sales Tax (LOST) revenues for 2010 are $2.8 million, up from $2.5 million for the current year, according to the budget document. “We are hopeful that improvements in the economy during 2010 will spur consumer spending , and translate into higher sales tax collections for the city,” said Kline.

Projected business and occupational tax revenues for next year are $375,000, an increase from $235,000 in 2009, the budget shows. That projection is also based on the economy, Kline said. Hobby Lobby recently opened in McDonough, and Kline said several other businesses are expected to open in the city next year.

Beckett began work on the budget in October. He said he does not expect any major budget adjustments will need to be made next year, due to a revenue shortfall.

“I’m confident in the conservative nature of our revenue estimates,” he added. “I feel good ... We could amend the budget up, and add some things to it.”