NATCHEZ — The City of Natchez apparently needs to cut approximately $749,000 from its 2016-2017 budget.

In the city’s current working budget, which the board of aldermen will present Tuesday at the first budget public hearing, the city’s general fund is made up of approximately $13.94 million in revenues and approximately $14.69 million in requested expenditures.

At first glance, that’s a difference of “an extremely large amount of money,” Interim City Clerk Melissa Hawk said.

“But that’s what we’re up against,” Hawk said. “We have to find a way to get it back to zero.”

The city’s overall working budget for the next fiscal year, which begins Oct. 1, includes $28.54 million in expected revenue and $28.356 million in requested expenditures. That puts the city approximately $184,000 in the black.

“That includes bank accounts, though, that are considered to be restricted funds … grants, capital improvements, the old pension fund, recreation, things like that,” Hawk said. “The general fund, that’s basically what operates the city. That’s what is $749,000 in the hole.”

On the heels of an audit of the 2014-2015 fiscal year that reported the city overspent its budget by more than $1 million and city clerk office reports that indicate the city has overspent its current budget by another $1 million, city officials are rethinking the budgeting process.

Ward 6 Alderman Dan Dillard, who has for years been the most vocal aldermen regarding the city’s finances, told the aldermen at a recent budget work session that, going forward, the city needs to base its budgets on actual figures instead of numbers used in past budgets.

The best resource for the budget, Dillard said, is audits of past fiscal years. Independent auditor Deanne Tanksley prepared spreadsheets for the aldermen showing actual revenues and expenditures for the past five years.

Dillard said using those figures to budget is the first critical step to ensuring the city adopts a balanced and accurate budget. The city must adopt a budget by Sept. 15.

The city is facing a challenge to evaluating the actual figures, Hawk said, because bank reconciliations have not been completed since September 2015.

In terms of cuts, Dillard said the city is looking at areas that can be trimmed.

“We need to look at all this grant activity,” Dillard said. “I don’t know if the city can afford to pursue these grants.”

The aldermen have voiced concerns about overspending and cash flow consequences of committing to grants that require matching funds.

Even grants that reimburse the city for expenses can sometimes tie up cash flow, Ward 1 Alderwoman Joyce Arceneaux-Mathis said, until the city receives the money back.

Among other areas to cut, Dillard said the city might need to eventually look at payroll costs and salary reductions.

“There gets to be a point where the city may not be able to afford all the employees we have,” he said.

Mayor Darryl Grennell said the city might need to consider furloughs in the event the bare-bones budget still needs to be cut.

“The board might also have to raise millage,” Grennell said. “The millage has not been raised since 1984, and we don’t want to compromise services of the city. We’ve got to operate the city.”

Even within the departments that are critical for city operations, such as police, fire and public works, the city will have to evaluate spending. That means, Dillard said, any purchase requests for new vehicles or equipment are scrutinized to ensure they are absolutely necessary.

The aldermen discussed last week changing the purchasing practices of departments.

Grennell said the city would utilize a requisition process through which department heads will have to electronically request a purchase order for items more than $100. Some aldermen said they would be comfortable with slightly increasing that number.

The system will be set up, Grennell said, so that if the money is not in the budget for the purchase, the department head will go to the city clerk to see if the purchase is critical enough for a budget amendment.

While the general fund appears to be facing a $749,000 deficit, it’s likely the budget contains at least some errors.

Hawk has made it clear to the aldermen in budget meetings that it is impossible for her to fully grasp the inner workings of the city’s budgeting process in just three weeks.

“It should be a five-month process, and we’re doing it in three weeks,” Hawk said.

Grennell said it is possible the budget for his office — which appears to be increasing from approximately $133,554 to $211,732 — in the working budget contains errors.

Grennell added an assistant for himself to the staff in addition to the current administrative assistant in the mayor’s office. Grennell said, however, the money budgeted for his salary — $68,000 — should cover those expenses.

Because Grennell is a retired public employee, he is only making a $24,000 salary and not utilizing health benefits. The salary for his new assistant is $30,000.

Grennell also transferred a city clerk staffer who functions as a courier and custodian to his office. The funds for that position should seemingly have been transferred from the city clerk’s office into the mayor’s office budget to cover the employee expenses, Grennell said.

Hawk planned to spend all day today in the city clerk’s office trimming the budget and correcting errors to balance the budget ahead of a Monday work session for the aldermen.

Hawk took over as interim city clerk just over three weeks ago after the city fired former city clerk Wendy McClain for violating a city policy, which officials did not specify.

McClain was the city’s first appointed clerk following the aldermen’s decision to make the elected position appointed. McClain was hired in July 2015 and was one of several staff members in the city clerk’s office who have been hired since 2012 and either quit or were fired.

The city is still grappling with mistakes of the past, Dillard said, including tax filings that were never done, resulting in fees and penalties, and paying back $200,000 transferred out of the city’s restricted pension fund under a previous city clerk.

The city has for years not only been plagued by the turnover in the city clerk’s office, but hamstrung by persistent accounting errors and cash shortfalls that have resulted in the city borrowing money just to make payroll.

Much of the overspending in the current and previous fiscal years came as a result of the city budgeting incorrect figures in previous fiscal years for its employee health insurance costs, Arceneaux-Mathis said. The city was budgeting less than half of what it was spending per employee.

The city has also been attempting to rebound from the death of former comptroller Gary Valentine, who had a “supreme knowledge” of the city’s finances, Arceneaux-Mathis.

“We thought that by hiring an assistant city clerk a year out (from City Clerk Donnie Holloway’s retirement), we would be gearing ourselves toward being prepared,” she said. “Hopefully and prayerfully … we’re talking about interviewing a (tourism) director, but we’ve got to interview for a city clerk … so that we can get a real handle on the city’s budget.”