NATCHEZ — When it comes to city budgets, old habits die hard in Natchez.

City Clerk Donnie Holloway said the city will inevitably take out a tax anticipation loan to balance its $33 million 2009-2010 fiscal year budget.

“We’re going to have to borrow money, but not as much as we have in the past,” Holloway said.

Holloway has not yet calculated exactly how much money the city needs to borrow, but Mayor Jake Middleton estimates the city will borrow between $500,000 and $600,000.

Holloway, Middleton and the Natchez Board of Aldermen will discuss the budget at 5 p.m. Tuesday at the City Council Chambers on Pearl Street.

Tax anticipation loans have become an unsavory trend in Natchez in recent years. Holloway said the loan the city will take out for this year’s budget will be paid back with tax revenues from the upcoming fiscal year, which begins Oct. 1.

Holloway said the loan is needed to cover payroll and insurance expenses through December. As of Friday, the city’s general fund balance was $425,928.

“And it won’t be there for long,” Holloway said, citing bill payments and other expenses.

Holloway said personnel salaries, the city’s largest expense, are approximately $550,000 per month. Salaries, primarily funded by ad valorem taxes, municipal fees and the general fund, are paid out on the 15th and the 30th of each month.

Last year, the aldermen approved a $500,000 tax anticipation loan with a 2.95 percent interest from Concordia Bank and Trust to balance its 2008-2009 fiscal year budget. Holloway said last year’s loan has been repaid in full.

Holloway had originally asked for a $1.1 million tax anticipation loan last year, which the aldermen denied.

The city took out a $1.3 million tax anticipation loan to balance the 2007-2008 fiscal year budget.

In fiscal years 2006-2007 and 2005-2006, the city borrowed $600,000 each year.

In fiscal year 2004-2005, it borrowed $650,000.

In fiscal year 2003-2004, it borrowed $550,000.

Middleton has vowed to stop money borrowing during his administration. In a May 2009 interview, Middleton said the tax anticipation loans are a direct result of money transfers from the city’s general fund to struggling city departments. Money transferred from the general fund to departments is not paid back.

“Over the years, we have lent money to departments, and we didn’t get it back. It stops here,” Middleton said last year.

Holloway said general fund transfers to city departments were included in this year’s budget, but no departments have requested additional transfers — a positive sign.

Middleton said he insists department heads operate within their means, and they have done so. However, the economic downturn, paired with decreased sales tax revenues, are the basis for this year’s loan.

“Sales tax didn’t start off this year like we anticipated,” Middleton said. “We’re still off, but (the increase) is a good sign that maybe things are leveling out a little bit.”

Sales tax revenues are up in Natchez for the fourth consecutive month. The city collected $425,928 in May, up from $422,781 in May 2009.

Sales tax revenues have been on the rise since February, when the city collected $418,097, up from $403,484 in February 2009.

The city collected $447,563 in March, up from 445,321 in March 2009.

The city collected $429,489 in April, up from $424,938 in April 2009.

The city experienced as much as a 12-percent decrease in monthly sales tax revenues in 2009. So far this fiscal year, the city has collected $4,223,843 in sales tax.

Middleton said the city has taken the necessary steps to avoid a loan this fiscal year, but actual execution is easier said than done.

“By the end of the administration, my goal is to be flush. It’s been tough, but that’s what the goal is,” Middleton said. “This didn’t happen overnight, and it’s not going to be fixed overnight.”

Terminations in the planning and public works departments have saved the city approximately $111,000, Holloway said. The resignation of grants coordinator Brett Brinegar last year saved the city approximately $40,000 annually.

Privatized grass cutting, which began March 1, was expected to save the city $119,556 annually, but it is now estimated to save approximately $60,000 a year.

Holloway said the city collected an extra $234,000 in property taxes this year due to the state-mandated property reassessment. In a December 2009 interview, Middleton the city would collect an extra $420,000 in property taxes. The value of one mil in the City of Natchez increased from $104,000 to $116,152, but the aldermen voted unanimously to keep its millage rate at 47.732 mills rather than lower it.

Holloway said the property reassessment helped the city tremendously, but the money has since been spent on salaries and bills.

Alderman Dan Dillard, chairman of the city’s finance committee, agrees the city has made significant strides in cutting costs.

“It’s been a tumultuous year, but I for one think we’re moving in the right direction,” Dillard said.

Dillard said the installation of new Springbrook accounting software will vastly improve the city’s budget forecast this upcoming fiscal year.

For more than 20 years, the city has used an in-house accounting program developed by City Data Processor Gary Valentine. The new software is specifically designed for government entities.

Dillard likened the city’s antiquated program to “rubbing sticks together to try to make fire.” He said the new software will give the aldermen a clear indication revenues and expenditures.

“Once the software is in, we will be able to better forecast the budget, and have more accountability and reliability of public finances,” Dillard said.

Dillard said the aldermen want to avoid another tax anticipation loan if they can.

“If we’re holding our expenses down and our revenues are a little bit off, we should be able, if we’re careful, to make it to the end of the fiscal year,” Dillard said. “But if we have to borrow money, it will be a lesser amount than we did the year before.”