City studies ways to balance budget when new facilities open

The city will need to adjust its budget to cover the costs of running the new multigenerational facility, regional park and future city hall complex to avoid a deficit.

The budget also will be impacted by requests from various city departments to add 11 staff positions and supplement the fund for the business incubator, costs that – if approved by the city council – could total up to $900,000 annually.

These expenses are paid using the city’s general fund, which consists of revenue from property taxes, sales taxes and such state-shared revenue as the city’s share of the vehicle-license tax.

It all adds up to a potential deficit, but Finance and Administration Director Tom Duensing said “there’s a laundry list of things we could do” to close the gap during the next few fiscal years. 

Duensing will present this budget forecast as part of the city’s mid-year budget review during tonight’s city council work session. 

The mid-year review is a five-year budget forecast examining the city’s two main funding sources for operations, the general fund and Highway User Revenue Fund. 

The highway user revenue fund uses “gas tax” money and other transportation fees and can only be used for street and highway repair and expenditures. 

Duensing will tell council members that since the multigenerational facility, regional park and future city hall complex won’t be open and fully operational on July 1, the first day of the 2013-2014 fiscal year, the potential deficit for that fiscal year is only $700, the result of only a few months of running the facilities. 

However, 12 months of operating expenses for the amenities would create a $1.7 million deficit for the 2014-2015 fiscal year. 

Combined with the costs of the additional staff and other, routine personnel expenses that could balloon to a $2.6 million deficit.

Duensing said “this is not an unusual situation” for a city to be facing. 

“We knew the $1.7 million was there, and we’ll address it,” he said. “This is why we go through the budget process.”

He said the $1.7 million in operating expenses was forecast after the city decided to do a full build-out of the multigenerational facility and aquatic center in September.

Also, the deficit – if there even is one once the city receives its share of state-shared revenue and/or tweaks how it plans to spend money during the next year – could end up being less than $1.7 million.

Duensing said the deficit amount is based on “very conservative” estimates of how much revenue the city will have to spend.

The forecast assumes no new single-family residential or commercial buildings are built – so no new property tax revenue – which is unlikely. 

The prediction also purposely underestimates what the city will get from state-shared revenue.

Also, Duensing said the city does have options as to how it wants to pay for the additional operating costs.