Without the 1-cent optional sales and use tax, the City of Cody cannot sustain the type of services residents and visitors expect.
City leaders are on target to pass a fiscal year 2019-2020 $43.52 million budget expected to result in $4.34 million less revenue than expenses. The shortfall includes more than a half million shortfall in the general fund that supplements the Rec Center and pays for streets, parks, buildings and law enforcement among other day-to-day services.
The city expects to start fiscal year 2020 on July 1 with about $27 million in cash savings. Together with expected $39.17 million in revenue, projected cash plus revenue in all funds is $66.17 million.
Councilors passed the budget on first reading June 4 with a 5-2 vote. Heidi Rasmussen and Glenn Nielson voted no. Mayor Matt Hall, president Landon Greer, Diane Ballard, Jerry Fritz and Justin Baily voted yes.
“I’d like everyone to be aware there’s a $600,000 deficit in the general fund,” Greer said prior to the vote. “That’s not sustainable for 5-10 years.”
To provide a buffer, finance officer Leslie Brumage typically estimates expenses high and is conservative when projecting revenue.
“I’d rather end up with extra at the end of the year than what we planned,” she said.
Anything carried over from the current year will be returned to reserves on June 30.
“I understand $600,000 is probably not going to happen,” said Rasmussen, a self-employed CPA. “But a $600,000 loss will eat through our reserves if that happens. … Something’s going to have to give.”
This could mean snow is not plowed from roads, cutbacks to the Rec Center (subsidized in the new budget at $802,328) or a reduction in the police force, she said.
Nielson said his vote against the budget would be in principal – “just to make the community aware, if nothing else.”
“I struggle heading down an unsustainable road,” he said.
At a special meeting Tuesday, Rasmussen, Baily, Fritz and Greer voted to adopt the budget on second reading without further comment.
A third and final ordinance vote will take place following a public hearing at 7 p.m. Tuesday at City Hall. Mayor Matt Hall expressed hope people will attend Brumage’s budget presentation.
Of the total $39.17 million in anticipated FY 19-20 revenue, roughly half – $19.75 million – is attributed to city-provided utilities. Another $6.32 million is state grant and loan money that passes through city accounts to Forward Cody in support of Gunwerks and Wyoming Authentic Meats economic development expansion projects.
One big number skews the overall picture somewhat. Because Cody’s $5 million cut of the 1-cent sales tax has been collected, only $10,000 in interest remains as new revenue, yet the second phase of a major sewer lagoon expansion and upgrade project along with remaining accessible street corner and chip sealing project work will cost $2.81 million after the budget year begins July 1.
Disregard that amount, and the budget still shows negative spending in every category except the newly formed, donation-funded Cody Public Art Fund ($4,120 surplus) and the electric fund, expected to gain $217,666.
At the core of the proposed budget is $9.98 million the city expects to pay for daily operations. Revenue is down 2.96 percent from FY 18-19 while expenses are down .3 percent.
The electricity fund, with its huge wholesale power cost, is now the city’s largest fund, Barry Cook, city administrator, said.
“For most cities, the general fund is the largest,” he said.
Cook, hired in 2014, said for the first time in his tenure the general fund budget has dipped below double digits.
If the next financial year goes as thought, $666,490 must come from the city’s estimated $7.46 million general fund cash savings. That’s not counting another $200,000 shortfall needed to cover vehicle replacement and events such as parades paid for with the city’s lodging tax revenue.
The deficit budget is standard in recent years. But the general fund negative balance, usually around $400,000, has expanded.
Not only is spending in the hole, the proposed budget is devoid of new money to fund capital projects.
Money for capital projects is “extremely low” for the general fund, Cook said.
Gone are the days of consensus funds when the city received $1.6-$2 million per biennium from the state, he said.
Personnel takes up 69 percent of the general fund account.
“That’s low for government,” Cook said.
When you add employees working for city enterprise funds of water, wastewater, electricity and solid waste, personnel makes up 34 percent of all fund expenses.
“We’re lean and efficient,” Cook said.
The budget proposes a total $227,831 increase in salaries and benefits for 112 employees. This results from a 3.7 increase in health insurance, a 1 percent cost-of-living increase and 2.5 percent merit pay awarded when an employee is evaluated.
A new position added to the police department brings that agency’s staff up to 25 for the first time in 5-6 years.
The council approved adding a position to replace an officer who’d requested military leave.
If he comes back, he will still have his job, Brumage said.
Summing up the budget situation, Cook says the city is treading water.
“We’re not sinking and we’re not going anywhere,” he said.
By trimming day-to-day expenses, he said it’s harder to provide basic services, which raises the question: How much to do you take from reserves to balance the budget?
“We have to cut revenue or cut services dramatically,” he said. “We just can’t continue down this road. Something has to change.”