That’s according to a report on the city’s finances compiled by resident Paula Campbell at the request of the council and presented to the city last week during a work session.
The city has had a budget deficit in fiscal years 2004 to 2011.
In her report, Campbell said Nelson’s way of operating is not sustainable.
The city’s general fund balance, the report said, shows a “serious” negative balance and without a sustainable general fund balance “the city is headed in the direction of becoming a failed financial enterprise.”
For the past eight years, the city’s expenditures have exceeded $400,000 while its revenues have hovered in the mid-$300,000 range.
Campbell said the city has had no property tax increases and a drop in property values has generated less revenue.
The city’s preliminary budget for the upcoming fiscal year 2013 shows the city with a $61,000 deficit, with expenditures projected at $436,450 and revenue around $375,300.
If no changes are made, the city’s revenues and expenditures are expected to grow further apart, creating a larger deficit.
The city’s fiscal year begins in October. The current budget is set at around $440,000.
The report also said the city, which sits on the border of Cherokee and Pickens counties, has a “substantial” inequity in its capital improvement expenditures.
The report also states the city suffers from a “lack of fiscal leadership and acceptance of fiduciary responsibility to the city,” insufficient surplus funds to accommodate cash flow inconsistencies and unanticipated contingencies, has failed to fund a dedicated amount for reserves, has no budget allocation for routine equipment maintenance or replacement and has made no accommodations for inflation or to address normal salary cost of living increases.
In order to get back on the right path, Campbell recommends the city establish and adopt fiscal management policies for the city’s operations, establish a capital improvement plan, clarify and follow its annual budget cycle process to “better assure sound financial decision making” and clarify and adopt its purchasing and bidding protocol to “meet accepted public sector purchasing standards and requirements.”
Campbell also said the city needs to “recognize that there is fiscal mismanagement and failed fiduciary responsibility under the city’s current financial leadership.”
It should also establish a goal for reserves, postpone personnel and major equipment expenditures and establish savings goals.
Nelson Mayor David Leister said he has been stating since he’s been in office that the city was in “trouble.”
Leister, who came to office in 2010, blamed past city leaders, noting he was “scoffed at and demeaned” for making those statements.
When asked if he and current city council members should take the blame, the mayor said “absolutely not” and noted the city last week held a work session to review the numbers.
The mayor said he’s proposed an alternative fiscal year 2013 budget, which includes outsourcing the city’s lawn care services and the creation of a 20-hour a week part-time maintenance and custodial employee.
“Our sanitation services are not sustainable under current market conditions, so I recommend letting the free market system take its course unless there is an immediate increase in subscribership over the next two weeks,” he added.
Leister also said he took funds set aside for his training and travel and added to City Clerk Brandy Edwards’ salary.
He took the salary of the one part-time officer and added it to Police Chief Heath Mitchell’s salary, he said.
The mayor also noted city leaders said that if the cuts don’t achieve the goal of closing the gap, it will have to consider other options.
“We operate as a business and as a business we are failing,” he said. “We either need to get our house in order or unincorporate,” he said. “That’s the worst case (scenario).”
Councilman Jackie Jarrett said the city council “has a mess” to work through.
“We have assets, we have sharp minds and a willingness to pull us out of the red,” he said, adding the city can make cuts, outsource services or sell items it no longer needs.
Council member Duane Cronic, who said the city will be “financially unstable if we continue with the status quo,” added Leister’s proposal is a “wonderful” step in the right direction.
Cronic said the city basically has two options: raise its millage rate or cut expenses.
“I feel confident that this council, along with the mayor can put our heads together and come up with a plan that will put the city on a more stable track without burdening the taxpayer,” he added.
Councilman Jonathan Bishop, who said the report was “eye-opening,” added he’s recommended the city cut the “excesses we don’t need.”
He noted its imperative the city trim its budget as much as possible before it turns to other measures.
“We’re a corporation and we’re supposed to break even,” he said. “If we can’t get our expenditures down enough to where our revenues match, then there’s another option we need to look at. I don’t want to do it, but if we can’t make our budget work, we have to look at raising taxes.”