While states and cities across the country are slashing spending in an effort to tackle mountainous budget deficits, at least one major American city can brag of a budget surplus.
Omaha, Nebraska, which forecast a $12-million budget gap last January is now touting a $3.3-million surplus for 2010.
Net sales tax revenue for the year amounted to $126 million, nearly $3.2 million above forecasts.
Municipal officials seek to put the surplus into the city’s cash reserve fund, which had been depleted due to recent budget problems.
“We're stable for the year,” City Finance Director Pam Spaccarotella said. “We're very excited about that news.”
Spaccarotella said Omaha has a much healthier financial condition than many other U.S. cities.
According to press reports, the surplus can be partially explained by a restaurant tax that the Mayor estimates generated $4.2-million alone since taking effect last October ($2.4-million more than originally expected).
The budget surplus comes at an opportune time for Mayor Jim Suttle, who is facing a recall challenge. Ironically, it is the restaurant tax that is the focus of angry citizens who want to remove Suttle from power.
The city will also realize $5.5-million in savings for health care costs and another $7.6-million from hiring and salary freezes (i.e., Omaha left 218 jobs vacant, including 74 fire and 69 police positions, which also reduced employee health insurance costs).
Suttle’s opponents remain unimpressed, citing the suspicious timing of the news, as well as the fact that tax hikes were a crucial element in balancing the budget.
Nonetheless, Moody’s Investor Service has rewarded the city with an AAA bond rating.
We expect the city's financial position to remain challenged over the near to medium term based on flat revenue collections and ongoing expenditure stress,” Moody’s stated. “We recognize management's commitment to maintaining expenditure controls and implementing revenue enhancements to eliminate budgetary gaps and retain financial flexibility.