In a fairly straightforward meeting, the City Council last Friday adopted a 2020-21 municipal budget without controversy and with a pledge to keep on top of revenues as the nation’s economy lurches through the COVID-19 pandemic.
The panel unanimously approved the $37.4 million spending plan, the biggest part of which is the $27.2 million operating budget, with the remainder comprising capital projects. With a projected revenue stream of $32.2 million, city officials expect to add $2.5 million to the General Fund reserve balance and subtract $8.1 million from the Capital Projects Fund.
Finance Director Paul Chung, who prepared his first budget for the city, described his revenue projections as “conservative but yet optimistic” that the city would be relatively unaffected by the economic disruptions caused by pandemic-related shutdowns, thanks to property taxes that represent more than two-thirds of the city’s income.
“All those revenues, we’ve taken into consideration to our best projection of what the revenue impact will be due to COVID,” Chung said at the meeting. “Property tax is still intact and is projected to grow next year. As you’re aware, the mortgage rate is at a historic low. A 30-year fixed is at 3.6%, and usually when interest rates are low, property values tend to remain high or tend to increase.”
Operating expenses increased by around $100,000 from the outgoing year, while the city is trimming 4.39 full-time-equivalent jobs. There are 24 capital projects planned for the year for $6 million, around $900,000 for capital equipment purchases and $3.3 million reassigned from the outgoing year’s budget to complete 14 unfinished projects.
In fine-tuning the revenue portion of the budget, Chung made adjustments to big-ticket items, including sales taxes, but opted to take a wait-and-see approach with some of the smaller revenue sources that will be more directly affected by state and county mandates meant to curb the spread of COVID-19.
“Paul was conservative but still realistic about how COVID might impact our big-picture revenues,” City Manager Marcella Marlowe explained. “On the other hand, there are some very specific smaller revenue sources — things like the recreation fees, library passport fees, planning and building permit fees. We did not direct the departments to make revenue adjustments to that because it’s so unknown at this point, we just didn’t know what to do.”
Marlowe added that in some cases, the loss of those sorts of revenue would be offset anyway. Not having any revenue from certain summer recreation programming, for example, means that the city would not have paid to host the programs anyway.
Council members generally agreed with the rationale and restated prior promises that they would periodically revisit the budget to make necessary adjustments. Outside of unexpected events requiring new expense appropriations, the city typically conducts a midyear review of the books.
City officials will likely conduct quarterly reviews of the budget, Chung said.
“You’re probably reassessing that on a weekly basis,” Councilman Steve Talt quipped. “I know there are concerns that we all have regarding the revenue side of this and that you guys are going to keep on top of that.”
City Council Approves $37.4 Million Budget
