More cuts are likely as the City of Chadron prepares its 2019-20 budget, as it appears that the majority of the council wants to keep the mill levy from increasing.
Preliminary numbers presented to the council in May indicated that if the city funded a salary increase and all of the capital improvements needed, it would be short $1.3 million across all funds. That figure decreased to just over $625,000 combined in the general and water funds last week during the council’s first budget workshop as staff had prioritized improvements to whittle away at the $1.3 million deficit.
However, that $625,000 deficit did not include a new request from the Chadron Public Library for $40,000 to replace its roof, a problem just recently discovered. The city has deferred maintenance on the library for several years, and it’s starting to show, said Drew Petersen, the president of the Library Board. In addition to the roof replacement, there is water damage in the children’s library, plaster and paint chipping and the emergency stairs are degrading.
“The library is such an integral part of the community,” said John Coates, who also appeared at the workshop on behalf of the library. “This building is a historical landmark. We have to do what we can to keep it usable to the community.”
Also left out of the draft budget is $75,000 for a crash truck for the fire department, the total cost of which is being split three ways between the ambulance fund, the fire department and the rural fire district. The fire department also needs to begin putting money aside for a new ladder truck and had requested $100,000 for that improvement. The new ladder truck, when it is purchased, is expected to cost nearly $1 million.
"Projected revenues are not meeting expenditures,” said City Manager Greg Yanker.
The City of Chadron changed its budgeting approach last year, moving from a mindset of being statutorily balanced to being fiscally balanced, where revenues in equal expenses out. That approach calls upon the city to avoid spending down its cash reserves.
While the deficit had fallen, the city’s general fund was still short nearly $289,000, and the water department was showing a shortfall of $337,600. The aim of last week’s budget workshop was to determine the council’s preference on how to get to a balanced budget. Yanker recommended against using the city’s cash reserves, which are below the auditor’s recommended levels.
The draft of the budget presented last week is preliminary and includes 3% raises across the board for employees and some, though not all of the requested, capital improvements. The city has also programmed in its last and best offer to the police union, which has filed a grievance with the Commission of Industrial Relations when it could not reach a negotiated agreement with the city.
The draft does not include the city’s final property valuation, which will not be released until mid-August. Revenues will likely increase above what the draft includes based on an increase in valuation, but it’s not expected to be a windfall.
“We’re assuming very minor growth,” Yanker said.
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The city adopted a general fund budget of $4,277,578 for the current fiscal year. The current draft for 2019-20 calls for a general fund budget of $4,269,378. The city is estimating it will have a cash carryover of about $143,000 available, which can either be used to build up its cash reserves, or help fund projects in the next fiscal year, or both. Revenues in the draft are budgeted at $3,980,450, a 7% decrease from 2018-19.
The water fund, which also shows a projected deficit, was budgeted to spend just over $1.3 million in the current fiscal year and is expected to have an ending cash balance of about $6,000. The draft for next fiscal year currently requests a budget of $1,269,775, with an expected revenue of $926,200.
While the council discussed which capital improvements might be worthy of keeping in the budget, Yanker asked that those decisions be left to department heads, instead seeking policy direction from the council on how to use any ending cash balances this fiscal year, whether or not to use cash reserves, and its priority between pay raises and capital improvements.
“We have more needs than resources,” Yanker said.
The council expressed a desire to avoid increasing utility rates since those have increased in the last couple of budget cycles, and only two council members – Mayor Miles Bannan and Cheryl Welch – said they would consider an increase to the mill levy, which has been flat for about five years.
With several positions falling behind comparability required by state law, the council continued its support for pay raises since employees did not receive one last year. However, they suggested a 1% pay raise across the board and using the remaining 2% toward pay raises for positions that are farthest behind on the comparability scale.
“I’d like to start chipping away at that,” said Councilman Mark Werner, who made the suggestion.
“I like the idea of finding a way that we can decrease our expenditures and still reward the employees,” concurred Councilwoman Cheryl Welch.
The council settled on removing all of the capital improvements from the budget for its first official reading Aug. 5, though that will still result in a deficit, as there is only $140,000 in capital improvements in the general fund draft. The council expressed some support for using up to 50% of the ending cash balance in the current fiscal year to balance next year’s budget, but only after other cuts have been made.
Longer-term, Police Chief Tim Lordino said the city needs to consider how the 911 dispatch center is funded. Currently, the City of Chadron and Dawes County provide general fund dollars, with the majority coming from the city. However, the dispatch center provides services to the cities of Whitney, Crawford and Harrison and the northern half of Sioux County. While it’s too late for the upcoming budget cycle to approach those entities about providing services in exchange for a fee based on population, the council is interested in pursuing the idea for the future.
Welch also urged the city to find ways to reduce its energy footprint in the future, which will also translate to savings, she said.