City council discusses future budget shortfall, use of fund balance, gaining public input on budget
By BRITTANY FHOLER
The Copperas Cove City Council held a special workshop for the upcoming fiscal year 2020-2021 budget Thursday evening, with council members providing city staff with direction to look into more revenue generators and expenditure reductions.
The city council first saw the proposed budget during a workshop on June 2 and again on June 9, when Budget Director Ariana Beckman walked council members through each of the city’s funds and then by each department and requests from departments. The budget presentation was 57 slides, while the budget itself is 283 pages.
The total budget presented by the city for fiscal year 2020-2021 is $45,272,832. The total revenue is expected to be $43,585,141. The budget’s beginning fund balance is $13,648,311, with an ending fund balance of $11,960,620.
Thursday’s workshop provided council members with the opportunity to provide direction and ask any questions about the budget.
Dipping into the fund balance vs. revenue-generating ideas
Councilmember Dan Yancey pointed out that the projected expenditures exceeded revenues, resulting in the need to utilize over $1.6 million from the fund balance.
“In my mind we need to look at some ways to increase income or cut expenses beyond where we are looking right now, because in my mind that’s just not a number that we as a council should approve, quite frankly,” Yancey said.
Some of the city’s proposed revenue generators include getting rid of the homestead property tax exemption, initiating transportation “user fee”, along with a possible property tax increase.
City Manager Ryan Haverlah explained that back in May, the city council discussed priorities within the General Fund budget and city staff provided some revenue generating ideas, specifically discontinuing the homestead exemption for property taxes, which would generate $232,000 minimum in revenue for the city.
At that time the council also discussed a transportation user fee of $3 which would be applied to utility customers bills and generate just over $500,000.
Haverlah said he had also recommended to only reduce general fund expenses for street maintenance by around $200,000 because that is the cost for specific roadway maintenance.
These actions plus a tax rate increase of one cent would generate over half a million dollars in revenue
Regarding other revenue generators, Haverlah referred to the Revenue Manual from the Texas Comptroller’s Office that he has provided to each council member previously.
“For the most part, we have utilized the available revenue sources for General Fund that are identified in that manual that local governments can levy or issue or establish,” Haverlah said. “As we talked about in May, if we want to have any substantial expenditure reductions, that is going to come in the form of service reductions.”
City manager’s priority: market adjustments for fire and public safety
Haverlah said that the city is recommending market adjustments plus Cost of Living Adjustments and a step plan for the Police Department.
“The market adjustments, as I’ve told council for a couple of years, that is probably my number one expenditure budget priority,” Haverlah said. “(This is) because we finally were able to provide market adjustments for Public Safety, Police and Fire, and that’s helped mitigate the exodus from those two departments as quickly as it was occurring. With the police department, we are still experiencing that, so that’s why the recommendation for a step increase within that department. If we don’t pay our employees consistent or competitively with other organizations that are doing the same type of work and for the most part, a lower quantity of work but they’re being paid more, our employees are going to leave, as they have been. So, if we want to have any substantial expenditure reduction, we really need to have a discussion about what are the priorities of services and based on that priority where do we start eliminating services?”
Yancey asked whether it would be possible to phase in the adjustments to get closer to reducing the $1.6 million deficit. Haverlah said it is possible to look into that.
Council member Jay Manning expressed concern over the revenue projections, adding that he didn’t feel that they would “live up to what we’ve projected.”
Haverlah explained that the state comptroller’s most recent Sales Tax Report showed that Copperas Cove had a near record month with a 15 percent increase, whereas the state overall had a decrease of 11 percent.
Council member Dianne Yoho Campbell said she was in favor of the market adjustments and COLA adjustments.
“I just want to say that I feel that we have to do the step program for those police, and I feel especially in this current environment, I think it’s critical,” Campbell said.
Council: mixed reviews on additional fees, tax rate increases
Courtland expressed concern over the effect of more fees on residents.
“You also have to look at how many times are we going to tack on a dollar here, another dollar here, oh let’s take out the homestead exemption, and we have citizens in our city that are hurting right now, but all we keep doing is wanting to throw darts at them, saying ‘Here, we’ve got to increase this, we’ve got to increase this, we’ve got to increase this,’ so, we really need to look at both sides of this coin,” Courtland said. “It’s not just about raising taxes and raising fees but again, we have some critical things that we really need to look at. What is truly the most critical for us to provide to our citizens, and I think that’s where we really need to look very hard at what we’re talking about and not just keep piling on on the fees and the taxes and this or that.”
Yancey said he was concerned about the city getting into a situation where there will have to be decisions made beyond the council’s control.
Council member Marc Payne agreed and said the city will likely have to do a mix of adding revenues and reducing spending. He offered phasing out the Senior Citizen Discount on utility bills as an option.
Council member Jack Smith said that there is still plenty in the city’s fund balance, even with the $1.6 million being utilized.
“Same thing I stated when we started this budget process, if we don’t use it in an emergency, we don’t need it there, and certainly, we’ve had an emergency this year, so I am for using part of the ideal fund balance as long as we don’t dip below the ideal fund balance,” Smith said.
Yancey later said that he felt that this discussion needed to happen and that a plan needed to be implemented, even if it was a two or three-year plan.
Haverlah proposed the idea of creating a budget process that involves residents.
“If city council was fully comfortable or confident that you knew exactly which services we needed to reduce or cut, I think you would have already made those recommendations, but I’m not sure we know exactly what those services are,” Haverlah said.
City manager proposes public involvement in budget process
He proposed a public involvement process added to the development process for the city budget, like the creation of small groups where members of the public could discuss their priorities and where they would be okay reducing the budget.
Manning said he felt this would “cloud the waters” more than they already are, while Campbell said she didn’t see the harm in a town hall setting compared to a small group idea. Manning added that he would be okay with town halls.
Smith pointed out that the council meetings and workshops are open to the public for residents to provide their input.
The council is meeting again on Tuesday evening to discuss the budget and hear from Director of Financial Services Velia Key regarding the Hills of Cove Golf Course financial performance and enterprise fund establishment. Following the workshop, the council will hold a regular meeting which will have the first of two public hearings on an ordinance amending the FY 2019-2020 budget.