NATCHEZ — The City of Natchez is currently operating with a $1.5 million budget deficit.

The Natchez Board of Aldermen discussed the deficit after Ward 6 Alderman Dan Dillard brought it up while reviewing a monthly budget report presented to the board at its Tuesday meeting.

City Clerk Donnie Holloway attributed the deficit to lower than expected ad valorem tax revenue and increased payroll expenses.

Holloway said ad valorem tax revenue is less than the city anticipated.

Ad valorem tax collections are $529,000 short of what the city budgeted, Holloway said. Automobile ad valorem collections are $165,000 short.

Holloway also pointed out the city’s payroll costs are nearly $400,000 more than they were last year.

Holloway said after the meeting the city’s annual payroll costs increased to $7.13 million in the current fiscal year from $6.76 million in the 2012-2013 fiscal year. The city has 266 full-time and part-time employees.

The payroll cost increases are attributable to increased salaries and more personnel, Holloway said.

The city currently has 262 employees, Holloway said. The city had 254 employees last fiscal year and 245 employees in the 2011-2012 fiscal year.

The city did not give across-the-board raises this year.

Holloway also cited increased health insurance and worker’s compensation costs as contributing factors to the deficit.

Holloway told the aldermen during the meeting that he and the mayor have been looking at the deficit and seeing where they could get the money to make up for it.

Mayor Butch Brown said he would like to look more closely at the city’s payroll costs.

“I want to look at those numbers again,” he said. “I’m not satisfied it has gone up that much.”

Brown said he believes the city will collect more ad valorem taxes that will help make up the deficit.

Brown said he does not know how the deficit will be handled at this point.

“When you budget based on previous year’s revenues and those revenues don’t materialize, you’re obviously going to have a shortfall,” Brown said. “That’s where we are now.”

The deficit could cause the city to borrow money.

“I never discount that,” Brown said. “As I’ve told you before, borrowing money doesn’t bother me.”

In other news from the meeting:

-The board finalized the streets that will be repaired in the latest round of the city’s street repair program.

The streets are Triumph Lane, Maple Street, Ram Circle, B Street, Beulah Street Eastbrook Road, Laurel Hill Drive, Marin Avenue, Ridgeway Road from Hurricane Road to Col. John Pitchford Parkway, Adam Circle, Brightowood Avenue, Chickasaw Street, Creek Street, Main Street from St. Charles Avenue to Martin Luther King Jr. Street, State Street and if funding allows, Briel Avenue to Orleans Street.

-The city named Concordia Metal owner Travis Brown, a Concordia Parish resident, an honorary citizen of Natchez for his service to the city.

Brown donated his company’s time and personnel to the city to remove the rail boxcar near the Broadway Street depot so the city could move forward with the restoration of the depot.

The city gave the boxcar to Concordia Metal to offset his costs, but Mayor Brown said the car “no where near” covered the expense.

-The city recognized Joyce Jackson, who recently retired from the Natchez Police Department, in honor of her 31 years of service to the department.

-The city declared June 14 Fat Mama’s Tamales Day in honor of the restaurant’s 25th celebration, which will take place Saturday.

-The board recognized Ketco as business of the month.