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PORT NECHES — The city of Port Neches is looking at a possible general fund shortfall totaling approximately $800,000.

Calculating the issue is tricky as the certified tax roll isn’t ready yet. There’s a increase in property values by approximately 15 percent and an approximate $100 million decrease in industrial values.

City Manager Ander Wimer explained to council the basics — when values increase, the tax rate decreases and vice versa as the law is for an entity to remain revenue neutral.

The general fund

A majority of the city’s general fund — approximately 70 percent — is for personnel and benefits, and the city is in the business of providing services.

A big chunk of the deficit, $685,000, includes a 2 percent cost of living increase and step pay increases for employees, plus other benefit the city traditionally provides, Wimer said.

Plus there are expenditures such as windstorm insurance and funding for Central Dispatch, where there’s not a lot of room to modify.

“There’s not a whole lot of latitude in what we can modify without impacting our employees, who are certainly dedicated to serving the resident of Port Neches,” he said.

The other portion of expenditures leading to the possible deficit comes from the need for three police department vehicles in the $115,000 range.

“This is not a gap that can easily be closed without significant impact to our employees,” he said.

Councilman Adam Anders asked Wimer the current fund balance and how much should the fund balance be.

The balance is in the $7.6 million range but that number is fluid. Wimer explained, saying it fluctuates during which times of the year taxes are being collected.

As for how much should be in the fund balance? That was something that wasn’t considered much until 2005 and Hurricane Rita.

Those funds are what allowed the city to operate without any concern financially in response to a storm or disaster.

“IF your question is, can the fund balance take an $800,000 hit, then ‘yes.’ It’s obviously not the preferred option but it’s not something we can continue to do year after year after year,” he said.

Some numbers and dates

Council now has some thinking to do.

They can opt to accept the dip in fund balance and hope for better news next year or they can elect to go to the voters and ask for a tax increase.

If the council is interested in exceeding the rates above the effective tax rate then an election would be triggered.

This would require the budget to be adopted by Aug. 16, which is the last day to call for an election in November.

That would mean special meetings to be held Aug. 9 and Aug. 16 in addition to the regular Aug. 5 meeting.

The timeline also includes time for the city to publish the appropriate notices.

No decision was made last week on the budget issue.