Decreases in sales tax revenue and investment returns are the main causes of the town's economic problems, and a variety of cuts in this year's budget will have to be made to make up a $975,000 shortfall, Town Manager Cal Horton said Monday.
A number of other revenue sources -- including taxes on gas and utility franchises -- also have fallen short of the figures projected in the town's budget, which was drafted last spring.
"The general economy is not as strong as we've expected it to be, principally since September 11," he said.
According to a Nov. 2 report by the Bureau of Labor Statistics, the Sept. 11 terrorists attacks worsened the nation's already weakened economy, although the report could not specifically describe how the two were linked.
Property taxes are the only major revenue source that now is expected to exceed projections for the 2001-02 fiscal year. The town's $975,000 shortfall results partially from the fact that decreased revenue has eliminated a $400,000 surplus that usually is saved for the next fiscal year, Horton said.
"By policy, we estimate revenues conservatively," he said. "Usually we have a cushion, if you want to call it that."
Horton said the town will handle the shortfall with a variety of approaches, mainly by delaying some routine expenditures until the next fiscal year, which begins July 1, 2002.
Small budget cuts and hiring freezes will be implemented at the town's service departments to save $100,000.
A delay in the hiring of police, fire and public works department employees in recently annexed areas is expected to save an additional $200,000.