By MELINDA J. OVERSTREET
for Glasgow News 1
Three quarters through the fiscal year, the city’s financial officials project it will end with the city’s essentially breaking even by June 30 with regard to its noncommitted funds in its primary bank account, but that doesn’t include less fluid funds like those in certificates of deposit or other investments.
The status update was presented in a different format than in prior months to the Glasgow Common Council Finance Committee. Previously, the shared documents essentially showed the balances of the various funds after revenues and expenses within only the current fiscal year. It did not take into consideration any balances carried over from the prior fiscal year. Councilman Terry Bunnell, chairman of the committee, said he wanted the group to have a clearer picture of the actual cash on hand and what had been specifically committed and what was still available.
He walked the group through the first batch of numbers, showing a bit shy of $11.49 million in the primary bank account as of March 31. That account holds the dollars for most of the separate funds within the city’s annual budget, including the General Fund, which is what most city departments’ revenue and expenses flow through.
After subtracting dollars committed from the General Fund for construction at American Legion Park and the farmers market, initial infrastructure development at the former Johnson property, and a fire truck that has been ordered and is expected to be delivered in late summer, that would leave a little less than $5.5 million available for spending in the bank. Dollars already committed from other funds that are held in that bank account, e.g. for the economic development loan fund and municipal road aid, total roughly $3.3 million, so with that figure subtracted from the $5.5 million, that brings the uncommitted balance in that bank account to nearly $2.16 million as of March 31.
In the final three months of this fiscal year, the anticipated expenses for the General Fund are estimated to total roughly $1.8 million more than the anticipated revenues, and estimates for the other funds included in that primary bank account show $222,639 more in expenses than revenue, for a total potential shortfall for this quarter of just more than $2.05 million that would need to be covered by that $2.16 million.
City Treasurer Stephanie Garrett explained some of the other figures presented, such as a department-by-department breakdown of final-quarter anticipated revenues and expenses within the General Fund.
She also emphasized that although the amount considered available, or noncommitted, may be roughly a wash at the end of the 2024-25 fiscal year, that primary bank account would actually still have at least a few million dollars in it, perhaps several million, because a lot of those dollars that are committed or otherwise restricted won’t actually be spent in this fiscal year. For example, the aforementioned fire truck alone, which costs more than $2 million, won’t be paid for until it arrives, which is expected to be in August.
As that discussion drew to a close, Bunnell provided somewhat of a recap, concluding that the city has to find additional revenue sources, and one possibility – but only a possibility at this point – is an increase to insurance premium taxes. That would require full council approval, but before it gets to that point, this committee would discuss and decide whether to recommend doing so and, if so, by how much. Garrett said the 5 percent rate for those hadn’t been raised since the 1960s.
Garrett said they also need to start planning for some new buildings, with the fire department’s headquarters building probably being one of them.
“We have greatly, greatly outgrown it,” she said. “You have got to grow the building.”
Bunnell said this group also needs to consider setting a particular threshold amount it wants to set aside in each budget as a contingency/reserve fund, e.g. a percentage of occupational tax revenue or a certain number of months’ worth of operating cash.
“Is there a number that we want to have that protects us in case we do have an economic downturn?” he asked.
Other reports
Auditors had requested last month an extension to complete the review of the city’s finances for the 2023-24 fiscal year, at least partially due to a staffing shortage. Then with the April 15 tax deadline looming, some of the personnel assigned to the audit had to temporarily redirect their attention to preparing documents for their other clients. Garrett said she’s been informed that with that date behind them, they can resume the work for the city. The actual combing through the city’s financial reports has been completed and now it’s a matter of getting the report written, she said. Bunnell asked that she contact the firm and request that they try to have the report ready by the next committee meeting, which is May 20.
One factor that is impacting the budget already is that the federal tax deadline was extended to November, and companies can’t know what their net profit amount is until those tax documents have been prepared, so that means the deadline for them to pay their net profit taxes to the city is also extended, so revenue that typically would have been received by April 15 could come anytime between now and November. Garrett said the revenue from that tax had already been roughly $400,000 less than projected for this year, which contributed to the projected shortfall in General Fund revenues, but now the lower receipts because of the deadline extension are compounding that. This circumstance also makes developing the budget for the coming fiscal year, which begins July 1, a lot trickier, she said.
Meetings began this week with department heads and administrative personnel to examine proposed budgets for that next fiscal year, a step that is following three weeks’ of preparations of projected revenue figures. Concerns regarding current and expected inflation rates were voiced by multiple members, particularly Bunnell, who also anticipates that revenues may be flat if not lower.
“Around this table, everyone understands that the occupational license fee is a major component of that General Fund revenue,” he said, pointing out that if local companies are making less money, the city also receives less.
“This budget will be a big challenge,” Bunnell said. “It’s major, probably one of the toughest budgets that will be put together for a number of years.”
Garrett provided updates on amounts spent thus far on some of the construction projects the city has. For example, a $360,000 payment was made toward the farmers market last week, leaving a balance in the budgeted/contracted amount of $580,679, she said. As the project isn’t expected to be completed until at least September, those expenditures will carry into the next fiscal year. She’ll have a better idea of how to split that between the years in around mid-May, she said.
Likewise, as work progresses on the overhaul of American Legion Park with its new aquatic facility replacing a pool that would have been 47 years old this year and adding pickleball courts and more, the first payment from the bond proceeds for the project was recently made of nearly $1.2 million, leaving a balance there of $4,183,885. The city also has the nearly $1.9 million mentioned earlier in its General Fund committed to that project. At least part of those costs are likely to spill into the next fiscal year as well, with a tentative completion in July of the current phase of work.
Projects that are dependent on federal grant funds that had previously been approved are essentially on hold, due to changes brought by the current presidential administration. They include a bridge at the Glasgow Regional Landfill and an expansion at the Barren County Family YMCA. In the latter case, the city is merely serving as a pass-through agency for the funds, but the timing of the receipt of funds can impact the budget. Money has to be in place and spent and then requests are made for reimbursement, but until further clarification and/or confirmation is received that the grant funds will be there to reimburse the city for the projects, they aren’t going to want to spend it, Garrett said after the meeting. Realistically, she said, she doesn’t expect that until after at least July 1.
Other capital expenses coming before June 30 are a large dump truck and another smaller type of truck, she said. Later, repairs to the city-owned parking structure between North Race and North Green streets were mentioned as an upcoming expense, but those dollar figures are unknown at this point.
