The city of Columbia is $4 million under budget so far through Dec. 14, an $11 million swing from last year's budget that likely saved the city's bond rating from a downgrade.
City Council members are so pleased with the news that they plan to suspend their search for a city manager and could offer interim city manager Steve Gantt a one-year contract rather than hire someone permanently.
Gantt said Thursday the city trimmed the budget in part by buying out the remaining years of service of 40 employees who were close to retirement. That comes on top of the highly publicized overtime cuts for police officers, employee furloughs, service cuts and layoffs.
The budget news was a relief for City Council and staffers. They have been fighting to keep the city's AA bond rating for its general fund, which pays for basic taxpayer services such as police and fire protection and garbage pickup.
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Last year, city officials spent $12 million more than they budgeted in the general fund and ended the year with a $7 million deficit; it was the third consecutive year the city had ended with a deficit, Gantt said.
The city had to use $24.7 million from its reserve fund to cover those deficits, which depleted the reserves to dangerously low levels.
City officials were concerned that Moody's, which has been under increasing pressure from federal regulators for perceived lax ratings, would downgrade the city's rating because of its string of budget deficits.
A lower bond rating would mean the city would have to pay a higher interest rate when it borrows money. Officials are planning to borrow money next year to pay for firetrucks, garbage trucks and police cars.
Gantt, along with Mayor Bob Coble and Bill Ellis, Columbia's interim chief financial officer, flew to New York last month to meet with Moody's. It was the first time in 15 years Columbia's city manager had met with the bond rating agency, Gantt said.
Wednesday, after learning of the city's budget situation, council members voted unanimously to put $3 million of the city's year-end surplus back into the reserve fund.
City officials then sent all of that information - the budget numbers as well as the city's vote - to Moody's officials in New York. They met Thursday afternoon to discuss the city's bond rating.
Moody's called Gantt at about 4:30 p.m. Thursday to say the city had kept its bond rating - primarily because of its performance through December and the council's vote to replenish the reserves.
"I am tickled to death," Gantt said. "That's the most important thing I've done since I've been with the city."
It's been a long journey for Columbia's accountants, who spent nearly two years sorting through years of unreconciled bank accounts and correcting errors such as paying the same bills multiple times and overpaying workers by not withholding enough Social Security taxes.
The problems were so complex that city taxpayers paid a team of accountants from the Municipal Association of South Carolina $1.5 million to basically run the city's finances for a year and a half.
But July 1, the start of the current budget year, things begin to turn around. City officials cut out all travel expenses, bought out the 40 or so employees who were close to retirement and eliminated 20 other positions.
City Council voted to end the city's commercial garbage service for Dumpster-like containers and approved a plan to not pay employees for six of the remaining eight holidays on the city's calendar.
But the biggest change, Gantt said, was the city's use of overtime. Last year, the police department spent $6 million more than it budgeted in overtime, Gantt said.
"It was like a faucet was running full blast, and come July 1, the faucet was turned off," Gantt said.
When Police Chief Tandy Carter wanted to put more officers on the street from Thanksgiving to New Year's, he needed $170,000 of overtime to do it. He only had $100,000 budgeted.
Instead of paying officers overtime, Carter took a patrol shift himself. He plans to work two shifts a week, Gantt said, along with the rest of the command staff.
The city spent $500,000 less than it budgeted for the month of July, $800,000 less in August, $1 million in September, $700,000 in October and $900,000 in November.
If the trend continues, city officials estimate, Columbia will finish the year with a surplus between $5 million and $6 million.
"We've got to make sure we stay on course, not just now but all the way through, so at the end of the fiscal year our budget will be at a substantial surplus," Councilman E.W. Cromartie said.
While the city has been able to control how much it spends, it now must wait to see how much it can collect. Property taxes won't come in until January, followed by business license fees and other fees in April.
Early indicators, such as hospitality and accommodations tax collections, which come in throughout the year, show the city is on target to hit its business license fee and property tax projections.
The only thing left is the city's franchise fees, which come from utility monopolies - including SCE&G and Time Warner Cable. The city has no indication of how much money that will produce, and the money will not be collected until June.
"That's why it scares me," Ellis said.
Council members will meet Monday in a closed-door session to discuss Gantt, who has served without a contract as the interim city manager since January, when Charles Austin announced his retirement.
"I shouldn't be the one leading the effort to pick a new city manager," said Coble, who has said he is not seeking re-election. "A year from now would be the earliest we would have another city manager in place."
Gantt, who turned 62 Wednesday, had planned to retire next December. But he said he has enjoyed his year at the helm and would consider staying up to two years, if the city asked him.
"It's been a hard year, and I've had to make some hard decisions," Gantt said. "I'd like to stay until we get the general fund where it needs to be."