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City working to meet reserve budget goals
Thanks to $2 million in Washington State Ferry settlement monies, the 2010 end-of-year balance sheet looks rosy, but the city still has work to do to meet general fund reserve goals by the end of 2011.
The target for 2011 is to place $2.4 million in reserves: $1.5 million for capital reserves, which could be used at any time; $500,000 for an emergency fund, which was to be filled with one-time revenue like grants and property sales; and $400,000 for a contingency reserve.
At the end of 2010, the city had made improvements toward reaching its reserve goals, but still has work to do.
As of Jan. 1, 2011 the emergency reserve is at $351,000 of its 2011 target; and there is no money in the contingency reserve. The capital reserve is at $1.1 million of its $1.5 million target. However, there’s that $2 million from WSF acting as a reserve since it’s still unaccounted for in the city’s 2011-12 budget.
The 2010 budget sheet presented to the City Council Wednesday night demonstrates many of the tough decisions the city made to cut costs and save money. The city managed to cut nearly $2 million in operating expenditures by the end of December, but its general fund reserve goals have yet to be met and the council will need to juggle what capital projects will receive funding and which infrastructure problems to address.
In March 2010, the city agreed to $1.4 million worth of budget cuts to place $1 million in the fund balance by the end of the year. Former Finance Director Elray Konkel left the city after his mid-year report estimated that only $78,000 would be in reserve at the end of 2010, despite the March cuts. In September, the council agreed to place $2.4 million in reserves in 2011 and have $4.8 million in 2012.
But Councilor Bob Scales said that even if expected revenue levels were to drop in 2011 the city will still be able to meet its reserve targets.
“Those weren’t one time cuts. That is what happened in the past and hasn’t worked,” said Scales. “I am very confident that we will meet our target reserves.”
Scales said that as property tax revenues begin to flow in the city should have enough cash to fund about half of the contingency fund.
With the cushion of the WSF settlement, the city general fund ended with $887,765 above budgeted revenue at nearly $19 million. Without the $2 million, the city would have been about $1.1 million short of their general fund revenue budget.
“We got lucky that the council made cuts and the administration saved a significant amount of money,” said Scales. “Had those two things not happened we would have had a huge deficit at the end of year.”
During Finance Director Ellen Schroer’s presentation Wednesday, council members voiced their satisfaction with the city’s financial progress in 2010.
“It’s great news to see what was accomplished last year,” said Councilor Barry Peters. “The city actually achieved reductions in expenditures far better than even council had set out to do in May.”
Despite the dull economy, the downtown Winslow area actually experienced a growth of about 2.8 percent or approximately $12,000 in sales tax receipts when compared with January-December 2009. Winslow lost 45 businesses while gaining 29, and began 2011 with a total of 212 – down from 228 in 2009. Receipts from construction sales tax are still bleeding with another loss of about 18 percent or $158,000 from 2009 tax revenue.
Total sales tax dropped by 4 percent in 2010 with $104,500 less in total sales tax revenue than in 2009.
Through layoffs, personnel restructuring and keeping vacancies open the city cut costs from the executive department by $288,034, $987,611 from public works and $326,389 from planning and community development.
The sewer operating fund came in about $1.9 million less than budgeted due to the non-issuance of bonds, while the Storm and Surface Water Utility fund came in with $168,000 more than projected.
The $2 million WSF windfall, which arrived after months of heated community debate over the option to lease approximately one acre of Eagle Harbor land or take the money, provided a much-needed cushion for the city. The city is still on Moody’s credit watch, and needs a healthy general fund picture to become competitive in the bond market.
The WSF money was placed in the general fund, but the council asked city staff to consider it as restricted until it decides what to do with the money.
Originally, the state had said the money had to be used for water-related projects, but dropped the requirement at the 11th hour. The city chose to take the money.
Though Schroer painted a broad picture of the city’s financials with year-end totals, several of the councilors noted the need to look specifically at operating and capital expenditures for individual funds, including all three utilities.
Schroer took a different approach to reporting financials than prior administrations.
“Through this system we are able to see how much cash we actually have, in a way that makes sense to the council and community,” said Mayor Kirsten Hytopoulous.
Previously, Hytopoulous said that city officials would provide financial information, but it was unclear as to how much of the money was restricted, unrestricted or otherwise designated.
With the new reporting standards Schroer can back out certain information to paint a more accurate picture of the cash on hand.
The council also received an update on the $1.77 million 2008 bond proceeds through Feb. 28, 2011. The information was specifically brought up after concerns from the non-motorized transportation committee about monies originally allocated to be used for trail easements and acquisitions.
Through the 2008 bond, the trail easements were budgeted $100,000. Of that money, about $20,000 was spent through last June, leaving the remaining balance at nearly $80,000. In reality, just $26,000 remains.
Exactly $422,091 is left from the $1.77 million bond. Many of the projects already completed came in higher than anticipated. The Waterfront Park restroom was $20,000 over budget and the dock repair about $10,000. The public works operation and maintenance bathroom was $20,000 over budget.
The non-motorized committee urged the council to create a resolution to reserve that $26,000.
“In the face of very strong support of trails and connecting paths in the community it seems to me that this is very important for the city’s credibility with citizens that this amount of money is preserved and actually spent strategically for that purpose,” said a representative of the non-motorized committee.
The council passed the resolution.