Councilor Don Koenigs led the charge as he questioned how the city budget was being prepared and offered some proposals of his own.
Koenigs suggested that the city manager should establish his budget at only 90% of expected revenues, rather than provide a balanced budget, with expenditures no greater than revenues.
“We should maybe operate at 90% of our revenue. We have pretty good reserves now, but they’re not what they should be,” Koenigs noted.
City Manager Steve Giesbrecht responded that this is his first year to prepare the city’s budget and he told Koenigs it might be better to start off with a balanced budget this year, and perhaps next year, he would have sufficient background to prepare a budget within the proposed 90% guideline.
In round numbers, a 10% reserve balance on the city’s $9 million general fund budget would amount to $900,000.
The city’s finance officer, Jody Tow reminded the council that in past years the city’s general fund had written off significant loans that were made to the Sanitation, Water and Senior Housing and Assisted Living facilities that dropped the city’s reserves from $6 million down to $3.4-3.5. The loans were not paid back to the city’s general fund, Tow noted.
Giesbrecht added that the city’s utility funds are now in decent shape and don’t require subsidies.
In stating his philosophy for the budget Giesbrecht told the council he would rather budget revenue low and expenses high and be pleasantly surprised at the end of the fiscal year.
The manager said he expects property tax assessments to remain flat along with sales taxes and said the city will gradually have to cut expenses to stay even with inflation.
When Koenigs asked if changing the city’s budget process from a fiscal year to a calendar year basis to allow the council to know what state and federal funds were available to the city, he met resistance.
Jody Tow said she would not favor a move to calendar year budgeting and said she could provide the council with a list of reasons to not change the budget process. The council agreed to let the city manager provide information to the council to debate at their next regular meeting.
Manager Giesbrecht told the council that department heads are already working on their budgets for the 2012-13 fiscal year and said he is at a critical point in the budget process and said he would not be able to give the council all of their requested information right now.
Giesbrecht reminded the council that capital expenditures are balanced out with operational and maintenance costs. “Unimak Street needs to be rebuilt. It’s not a want, but a need,” he said. To put off capital projects could cost the city dearly in operation and maintenance costs when the city is forced to repair leaky or broken water or sewer pipes in the middle of the night.
During the meeting Councilor Koenigs said it would be helpful for city departments to break-out detailed costs of wages, benefits and equipment operating costs. This would allow the city to evaluate the possibility of privatizing some city projects that could be done more cost effectively by the private sector.
The city council cannot take action on matters discussed in a work session, but they can bring the topics up for debate at regular council meeting times.