NATCHEZ — On the heels of an audit that shows the City of Natchez overspent its budget last fiscal year by $1 million, city officials met for more than three hours Monday to lay out the framework for its upcoming fiscal year’s budget.

The city is projecting approximately $32 million in revenue and approximately $28 million in expenditures for the 2016-2017 fiscal year, which begins Oct. 1. The city must adopt a budget by Sept. 15. Those figures are likely to change once the city completes the budgeting process, Interim City Clerk Melissa Hawk said.

Mayor Darryl Grennell and the Natchez Board of Aldermen met Monday evening for a review of audits of previous fiscal years and to review budget proposals from department heads for the upcoming fiscal year.

The aldermen are expected to hear budget proposals from more department heads at today’s finance committee meeting at 4:30 p.m. in the City Council Chambers.

Budget figures for the current fiscal year, which ends Sept. 30, show the city has overspent its budget by approximately $1.2 million, Hawk said after the meeting. Hawk was appointed approximately 2 weeks ago after the city fired its first appointed city clerk, Wendy McClain.

Those figures could change, however, when the city receives additional ad valorem tax money before the fiscal year ends Sept. 30.

Ward 3 Alderwoman Sarah Smith said the city needs to look now at its projected tax revenue and compare it to what the city actually collected in previous years to ensure the city will make it through the end of the year.

The figures may also not be completely accurate because the city’s bank accounts have not been reconciled since Sept. 30, 2015, a recurring problem Tanksley noted recently in the city’s 2014-15 audit.

Smith said it was disheartening to hear the bank reconciliations had not been completed, since the aldermen were told at their last meeting that work by city clerk’s office staff on reconciliations was improving.

Tanksley said she could recommend outside professionals with which the city could contract to get caught up again.

“The problem is that we’re catching them up, and we’re catching them up, and then they’re not staying caught up,” she said.

A recent audit of the city’s 2014-2015 fiscal year shows that the city overspent its budget by approximately $1.1 million. Because of a citywide fund balance of the $3 million, the city is not facing a deficit because of overspending.

A large part of the city’s budgeting problem is that budgets for previous years were based on prior budgets and, essentially, “doing things they way we’ve always done them,” Ward 6 Alderman Dan Dillard said.

The most reliable source of budget information the aldermen have to use for the budget is found in audits of previous years, Dillard said.

Tanksley has prepared spreadsheets for the mayor and aldermen that look at actual revenues and expenditures for the past five years.

Dillard said he thinks the aldermen should evaluate those figures and look at its predictable streams of revenue and be conservative about budget estimates.

“If you look at previous years, it’s based on nothing realistic,” Dillard said. “With the previous administration, one year they started with a $40 million budget.”

Dillard said the city needs to look at key areas of its budget before evaluating budget proposals from the departments — the matching funds the city has committed for grants, the city’s debt service, employee costs and basic department operating costs.

“Those things are not discretionary,” he said. “We have to pay our employees. We have to pay our bonds. We have to operate these departments. Then from there, we can look at these department.”

Community Development Director James Johnston reviewed with the aldermen a spreadsheet outlining the city’s various grant monies that total approximately $19.7 million and the approximately $917,000 required in matching funds.

The aldermen also expressed concern about reimbursable grant funds and the impact on the city’s cash flow.

Ward 1 Alderwoman Joyce Arceaneaux-Mathis said in previous years, the city has had to expend monies for grants in order to be reimbursed. That can tie up the city’s cash flow, she said.

Tanksley recommended any matching funds for grants be set aside ahead of time, so it does not impact the city’s cash flow, and the city is able to determine exactly how much matching funds for grants it can feasibly commit.