OPELOUSAS — The city is projected to have an operating fund deficit of at least $1.1 million by the end of the 2013 fiscal year, according to an annual audit report presented at the monthly meeting of the Board of Aldermen.

Accountant Troy Courville, of Kolder, Champagne, Slaven and Company, which prepared the audit, said the city has made strides in reducing its annual deficit from $3 million at the end of the 2010 fiscal year to $1.13 million in 2012.

That rate of deficit reduction won’t be enough to forestall the projected shortfall by Aug. 31, which is the end of the 2013 fiscal year for Opelousas, Courville said.

“You will probably be out of savings by the end of the fiscal year. After that, the city clerk may have to separate the bills and decide (which vendors) will get paid in 30 days,” Courville told the board.

The city received $10.5 million in sales taxes in 2010, according to the audit.

In 2011 sales taxes accounted for $10.7 million and $10.97 million by the end of 2012, the audit shows.

While sales tax revenue has increased, Courville said, that is offset by a $1 million annual increase in what the city pays into pension funds for police officers, firefighters and other civil service workers.

The audit report also showed other areas where the city is having problems avoiding a deficit.

Employee health insurance costs exceeded what workers paid in premiums by $430,000 in 2012, Courville said.

Over a two-year period, insurance costs have run a combined $750,558 deficit, Courville said.

What has helped the city raise more money is a recent increase in what municipal customers pay for utilities such as water and sewerage, Courville said.

Utility rate increases generated $2.54 million for the city in 2012, he said.

However, Courville added, utilities should not be considered a stable revenue source.

“You are still in a deficit position,” he said. “The city on an annual basis is continuing to spend more money that it is taking in. Although it has been helping keep the city afloat, relying on utilities to run city government is not the best thing to do.”

The city cut its annual expenses by eliminating a yearly 2 percent cost of living raise traditionally given to all city workers, Courville said after the meeting.

Alderman Julius Alsandor said the heads of city departments did their part to help reduce the deficit in 2012 by making necessary cuts.

That may not be enough if the city continues to face deficits like the one projected at the end of 2013, Alsandor said.

“We will have to look at some more cuts,” he said.