NATCHEZ — Current economic conditions mean city officials are preparing for budget cuts, and layoffs may be an option.

Tax revenue increased in the first quarter but is projected to be lower in the second quarter, City Clerk Donnie Holloway said.

And now city leaders believe the effects of the national recession are headed to Natchez.

Officials agree — it’s time to tighten up.

In the first quarter of the 2008-2009 fiscal year, the City of Natchez has spent approximately $3.57 million of the $13.45 million budget it adopted in September.

The city does not have a quarterly budget, so there is no way of knowing if it’s overspending its budget.

However, if the city spends as much in each quarter as it did in the first quarter, the city will be over budget by the end of the fiscal year.

But Holloway said many first-quarter expenses have been one-time expenditures, including a $460,000 bill for insurance.

In the first quarter of the 2007-2008 fiscal year, $3.39 million of the $13.41 million budget was spent.

The current expenditures have some city officials worried.

“We’re spending money like we’re not in a recession,” Alderman James “Ricky” Gray said.

City Engineer David Gardner said the city has been trimming the budget all 16 years he’s been a city employee, and more cuts will be difficult.

He said there is hardly anything left to cut.

“We’re down to the hard decisions now,” Gardner said. “Those decisions have been avoided for so long.”

Those hard decisions begin with looking at making cuts in personnel, he said.

“When you’re in the economy we’re in now, those kinds of decisions will more than likely have to be made.”

Holloway and Mayor Jake Middleton agreed the first place to trim is personnel.

“Personnel is our biggest expenditure,” Holloway said.

For example, the police department’s overall budget is $2,749,734.

Payroll expenditures in the police department are $1,677,528, and with benefits, payroll makes up 60 percent of the department’s budget.

Add in retirement, insurance and Medicare, and the number rounds out to $2,083,864. The rest of the police department’s budget is spent on gas, utilities, ammunition, uniforms and other essentials.

Typically personnel costs are 60 percent of any department’s budget, Holloway said.

“The first thing anybody ever cuts is personnel,” Middleton said.

Middleton said he plans to caution his department heads that budget cuts are coming. He said he is considering telling them to start informally evaluating their employees so that if personnel cuts have to be made, they’ll be ready.

Hiring freezes are an option too, the mayor said.

Right now the city is not creating new positions outside of the budget, but if a position is vacated, it might not be filled.

“It may come at the end of this (second) quarter that we may say if someone leaves, you won’t replace them,” Middleton said.

Natchez Police Chief Mike Mullins said one of his officers is being called to active military duty.

Mullins wants to hold open the position for when the officer returns, not freeze it. The last thing he wants to do is cut services, he said.

“If you cut a police officer, you’re cutting services,” Mullins said. “To do what we’re doing and provide the service we’re providing, we have to have these people. I’m not going to cut services as long as I have the money in the budget to provide the services.”

The city anticipated high gas prices for the fiscal year and budgeted $174,720 for police department fuel.

In the first quarter, the police department spent $7,117.21 in fuel.

But Mullins said he needs the excess money not spent on gas for other needs.

“(Cutting that money) wouldn’t be feasible,” he said. “There are areas where I need to move money from the fuel budget into other areas, things that have come up.”

Mullins said if the board allows it, he would like to move excess fuel money to his equipment line item.

Mullins said the money could be used to buy stop sticks for patrol cars, Tasers and the money could also go toward any computers that crash.

“We have equipment needs every year,” he said.

Other city departments spend money in a similar pattern — much of the budget goes to salaries and utilities.

Gray said he would cut personnel as a last resort and believes other cuts could be made first.

“If it’s going to get that tight, before we layoff some people there are other options,” he said. “If you try to hold onto personnel, then you’re going to have to cut in other places — maybe cell phones.”

The city distributes approximately 30 cell phones to various city officials.

Gray said with some departments, cell phones are necessary — fire, police, public works, inspection — but in others they are not.

A one-month cell phone bill for Middleton, Holloway, the city hall mail runner, the grants coordinator and the data processor is between $400 and $500.

“When we had our budget hearing, I brought up cell phones once or twice every meeting,” Gray said.

Holloway said he does not know how much money the city would save overall if it cut all cell phones.

The police department has 11 cell phones, and the city pays $39 a month per phone.

If the city cut all police cell phones, it would save $5,148 each year.

Gray said another area to cut could be the city cars that are driven home by city officials.

The police department sends 13 city cars home with various police officials.

If each police official puts five miles on the car each day driving to and from work at $1.30 per gallon, the cost would be $1,098.50 each year.

“If the budget gets tight, everyone other than the chief and commander might have to drive to work, get their vehicle and drive back,” Gray said.

Dillard, who is on the city’s finance committee along with Gray, Holloway and Middleton, said it is important to separate necessary spending from what he calls discretionary spending.

Dillard said travel is example of discretionary spending.

“I’ve tried to identify (discretionary spending) in each department,” he said. “It was our intention to clamp down on those for the first quarter.”

In the first quarter, $2,856.70 has been spent on aldermen travel.

No matter what the cuts may be, all officials agree serious discussion needs to happen.

Gray said the newly formed finance committee is supposed to meet monthly, but hasn’t been doing so.

Gray said he doesn’t know why the meetings aren’t regular.

Dillard said there have been no meetings because the city has a lot of “irons in the fire.”

The mayor said the committe has not been meeting on a regular basis but has met a few times.

Holloway also said the committee is not meeting regularly, and said he’s waiting on the mayor to call a meeting.

Dillard said a meeting is penciled in for the second quarter, but a date hasn’t been finalized.

It’s important to be on top of the budget — always, but especially now, Gray said.

He said it is essential to keep an eye on the budget and to try to be on top of it.

“It’s better to know what’s going on than to start reacting to every situation that comes before us,” he said.

He said he’s ready to re-evaluate the budget.

“I have some serious concerns, and I can’t wait until we meet again.”