New City Council members met with top City staff on Thursday, May 17 at an all-day council retreat to discuss goals and set priorities for 2018/19. The Council was presented with information on a variety of topics, including governance, finance, City lands, and the 2018 budget. The purpose of the meeting was to bring the newly elected City officials up to speed on happenings at City Hall, and provide them with an opportunity to get acquainted with current issues and challenges facing the City.
Following a series of staff presentations and round table discussions, Council members agreed on a set of consensus goals for the remainder of 2018, moving into 2019:
– Financial Sustainability
– Community Strategic Vision
– Community Information and Involvement
– Economic Development
– Customer Service
– City Organization and Budget
– Intergovernmental/Community Collaborations
The primary challenge currently facing the City is a significant 2018 budget deficit. The City’s 2018 adopted budget assumed a $2.3 million all funds deficit, with a $1.8 million general fund deficit, as a result of planned expenditures that were greater than anticipated revenues. Planned expenditures should have been covered by beginning fund balances, however, the City never finalized the 2016 and 2017 accounts.
Immediately following the resignation of the prior City Manager and Finance Director, the Interim City Manager and Interim Finance Director hired a CPA consulting firm to close out the accounts for 2016 and 2017. An experienced budget accountant, and veteran retired city manager, was also brought on as the Interim Assistant City Manager to work with the Finance Department to review and update the 2018 budget assumptions.
Based on the results of their initial findings, the current 2018 budget deficit is as follows:
- The 2017 Ending Fund Balance/2018 Beginning Fund Balance is $2.4 million lower than anticipated ($4.9 million adopted versus $2.5 million actual).
- After updating revenues and expenditures, the All Funds Deficit currently sits at $2.65 million; the General Fund Deficit is $1.65 million.
There are several contributing factors that have a significant effect on the City’s general fund, these include:
- The reduced $2.4 million General Fund Beginning Fund Balance in 2018 (down from $4.9 million) means that the anticipated $3 million 2018 Ending Fund Balance is actually much closer to $600,000.
- Known, but unbudgeted personnel costs are $533,000 more for all funds, and $365,000 more for the general fund.
- Additional unbudgeted line item expenses are around $400,000.
- $710,000 from the sale of solid waste assets was improperly sent to the general fund rather than being held in the appropriate solid waste fund for the landfill closure.
In their commitment to financial sustainability moving forward, Council members and City staff outlined a series of action items to address the current 2018 budget deficit:
- Prepare a preliminary revised 2018 budget for the next City Council study workshop on June 19, 2018.
- Identify necessary 2018 budget adjustments and begin 2019 budget development.
- Conduct new City Manager interviews and selection, July 30-31.