City finances continue to improve, mayor says
Two years ago, Eureka Springs Mayor Butch Berry couldn’t sleep. Berry had just been elected mayor, and finance director Lonnie Clark told him the city’s finances were in bad shape. Berry and Clark shared the same nightmare, fearing the city had dark days ahead.
“Spending was out of control. It was just a terrible feeling,” Berry said. “Lonnie came in and said, ‘If we don’t start making drastic changes, we’re going to have to start laying people off.’ ”
Berry took action and issued a memorandum on April 18, 2016, placing a freeze on “all non-operations essential expenditures.” Some of the expenditures affected by the freeze included new hires, replacement hiring, pay rate increases, uniform purchasing, maintenance on both buildings and equipment, professional services and travel, conference, training, education, tuition and professional dues and fees.
This week, the Citizen caught up with Berry and Clark to discuss how the city’s finances have changed since the spending freeze began.
Because the spending freeze applied to all non-essential expenditures, Berry said, department heads still had access to everything they needed. Berry said the city has purchased a new $500,000 fire truck and spent $80,000 on breathing equipment for the fire department since 2016.
“The departments haven’t gone without,” Berry said.
Alderwoman Mickey Schneider said she was concerned the freeze would affect the city’s personnel, saying she wanted to be sure the city could bring on employees to replace those who leave. That’s especially important for emergency services, Schneider said.
“Generally speaking, the spending freeze has been good. A lot of unnecessary waste has been avoided, but at the same time, there should be positions that aren’t involved in that,” Schneider said.
There has been some turnover at the police department over the past two years, Berry said, and he has worked with police chief Thomas Achord to hire replacements. That has never been a problem, Berry said.
“Thomas would come in and say, ‘I need to have somebody replaced,’ ” Berry said. “We would say, ‘OK, find the best person and hire them.’ ”
He continued, “We’ve never gone without personnel. We’ve made sure when we lose somebody to replace them. We just haven’t gone on to hiring additional personnel in the fire department or the police department. None of our services have been cut, but we have taken a more active role in supervising that.”
Alderwoman Kristi Kendrick said the spending freeze is a good thing.
“It gives the city an opportunity to focus on the real longterm needs of the city, rather than jumping from emergency to emergency,” Kendrick said. “Rather than focusing on the urgent, we’re focusing on the important.”
The idea of the spending freeze was to get a better handle on how the city spends money, Berry said.
“Any non-essential items would have to come before the mayor and the finance director for approval,” Berry said.
The spending freeze wasn’t the only change Berry implemented. He described the way the budget worked when he became mayor, saying department heads didn’t keep track of how much they were spending. The mayor controlled the budget, Berry said, and the council approved it.
“None of the department heads had access to what their budgets were,” Berry said. “They never had an opportunity to see how much money they were spending, so of course they could spend over their budget and not realize it until it was too late.”
To stay afloat, Berry said, the city had to find money somewhere.
“For numerous years, we had been dipping into what we call our reserves,” Berry said. “Our reserves are basically what people would consider their savings account.”
Clark remembered how the budget was managed when he came on as finance director in 2011. He knew he was facing an uphill battle, Clark said, when he realized the city’s accounting system was at least 10 years old.
“It had not been updated. One of the first questions I was asked was, ‘What are you going to do about the accounting system?’ Well, I wasn’t going to do anything about it until I understood what we had,” Clark said. “I needed to get a better feel for what we needed.”
Clark said he worked with Berry to create a new procedure where department heads have constant access to their budget and can see how much they’ve spent. In addition, Berry said, he arranged to have monthly budget meetings with department heads and a monthly budget workshop with the city council.
“That is a big thing. We are getting reports people can understand, and we can drill down and answer people’s questions,” Clark said. “At any point, the department head can pull their budget up on the computer. It has really made them conscious and aware of how much they’re spending.”
The city doesn’t just have to worry about the big expenses, Clark said.
“It’s crucial to watch all expenditures for everything,” Clark said.
Berry said he’s proud of how the department heads have responded to the new procedure, saying everyone has benefitted from it.
“They’ve done a great job. Now they have a sense of ownership, because they’ve been able to see exactly where their budget was and how much they’ve been spending,” Berry said. “Once they had access to their budget, they started being responsible for that.”
Alderman Bob Thomas said he’s happy with the changes.
“It was a disaster two years ago. We started improving since we got the new council and mayor,” Thomas said. “Past mayors chose not to share a lot of information with the council about budget. The mayor now understands that the council and department heads are responsible for the budget, and they have to understand it and work with it.”
Compared to 2016, Berry said, the city is in much better financial shape today. Berry said the city put between $300,000 and $400,000 back into reserves this year, saying that’s one of his biggest accomplishments since taking office.
“This was the first time in at least 10 years or more that we were able to put money back into reserves,” Berry said. “We literally spent all our reserves, and we finally saw enough savings to put money back.”
This is also the first year the city has given out merit and personal raises to its employees, Berry said, since he declared the spending freeze. That’s important, he said, because everyone who works for the city has helped improve its finances.
“It’s not only the department heads. It’s been all the city employees,” Berry said. “They’ve really tightened their belts, and because of that, we were able to come back and give some merit raises.”
Moving forward, Clark said, he hopes to slowly replace the vehicles used by the public works department and eventually build a maintenance building to house the vehicles. The savings will help the city pay off debt and work on infrastructure problems, Clark said.
“Two years ago, we were on the verge of being broke and today we are financially stable,” Thomas said. “We’re putting away some money to repair infrastructure. We’re in good shape.”
Alderman Terry McClung said he’s still worried about the city’s finances.
“We’re not out of the woods by any means. We still need to be vigilant, and we can’t be throwing money out there,” McClung said. “I want to make sure we keep the city in the best shape possible while being fiscally responsible.”
There’s always more to be done, Berry said, but he and Clark are certainly feeling better about the city’s future.
“Today, we’re sleeping really well,” Berry said. “I’m really excited. We’re not just keeping our heads above the water. We’re rising up.”