“Once again due to the state of the economy, revenue collections are slow at this time and in order to maintain our cash flows, we need to cut spending until collections catch up around the first of the year,” Davis said in the memorandum issued Monday afternoon. “Therefore, please delay any and all new purchases until after January 3, 2011.”
He said Tuesday this is a common business practice used in the two previous years to ensure monthly obligations are met.
“Only the County’s General Fund is impacted by this directive,” he said. “This purchase order directive from my office comes about six weeks earlier than the one issued last year.
“I am endeavoring to be pro-active as well as address the concerns of some commissioners who criticized me last year for not issuing the directive sooner.”
Cleveland City Manager Janice Casteel said this morning uneven cash flow is not unique to county government but the process for dealing with the problem is different. Under the council-manager form of city government, the city finance officer meets regularly with a team of designated departmental budget officers who devise a 12-month cash flow plan. Under the direction of the city manager and finance officer, team members work with each other to schedule capital purchases based on need.
Davis said the County Commission adopted the property tax rate of $1.792. Department heads and elected officials submitted their budgets based upon that figure.
“I assume they are confident they can run their departments on the approved budget. All spending must be in the budget unless the County Commission approves an amended budget,” the mayor said. “I informed the County Commission and department heads at the beginning of the budget cycle that this would be a ‘belt tightening’ year. This is a reality of the recession and a requirement to live within our means.
“However, the budget includes sufficient revenues to cover expenses but cash flow issues occasionally arise during this time of year.
“With the cooperation of each department head and elected official I anticipate no problem in managing the slowdown in cash flow until tax collections improve at the end of the year.”
Dan Howell, the mayor’s executive assistant, said the purchase order directive from the Bradley County Mayor’s office was issued to address the annual slowdown in revenue collections and has nothing to do with the amount of money in the budget. These are two separate issues.
He said 47 percent of county revenues are economy driven, such as sales tax, fees for services and state revenue. Thirty-four percent of revenue in the Bradley County General Fund is based upon property tax collections.
“Tax notices are not mailed until October which means the majority of taxes are collected from December through February,” Howell said. “This creates a slowdown in cash flow. As the County’s chief financial officer, staying on top of cash flow becomes a critical part of managing the County’s finances.”
He said the directive does not mean department heads cannot spend money allocated in their budget. If a department has budgeted for a new computer, they are asked to delay the purchase until January 2011.
A spending freeze or slowdown was issued in September 2009 through January. In 2008, the memorandum was issued in December and lifted in January 2009.
