NORMAN — Despite hiring freezes, no pay raises and vacant city staff positions being eliminated, Norman continues to use its general fund balance to buoy revenue sources and balance the budget. The downward trend must stop, council member Robert Castleberry told fellow council members at a FY 2014 budget study session Tuesday.
“We are planning to spend $2.5 million more than we expect in revenue,” said Castleberry who is a a certified public accountant. “That will leave us with a projected general fund balance of $1.2 million.”
The city has been drawing down its general fund balance for several years. In 2008, the general fund balance carried over $12.6 million.
“That was an excess,” Castleberry said. “I think you probably need to be at a 3 to 4 percent level. Right now, we’ve budgeted to finish at 1.5 percent. That’s definitely too low.”
On the plus side, the city council has put $1.5 million in the Rainy Day fund and is proposing to transfer another million this year, bringing the Rainy Day fund up to $2.5 million.
The Rainy Day fund acts as an emergency savings account that can only be used under certain circumstances.
Tuesday, Norman Finance Director Anthony Francisco outlined seven proposed budget amendments based on direction the city council has given staff for changing the proposed budget document. Most of those are last minute housekeeping details.
Castleberry proposed another amendment to cut the already lean budget.
He suggested chopping expenses described as supplies, materials and vendor services. The city manager will bring back details on those items so the council can make a more informed decision about how much can be trimmed.
“It will give us a chance to do a line-by-line assessment,” Castleberry said. “The key thing is, we’ve done this with no personnel cuts this year.”
In other city business, city attorney Jeff Bryant reported on the status of the University North Park TIF. The TIF district has generated an extra $22.9 million in net sales tax since it’s inception in October 2006 through March 2013.
Of that money, $13.4 million has been paid or is paying for road and other project components of the UNP, including Legacy Park construction, which is currently underway. The remaining $9.5 million in sales tax has gone into the general fund.
The TIF also generated $7 million in transfer adjustment sales tax that has gone directly into the general fund. The transfer adjustment is sales tax collected by businesses that were already located in Norman but that moved to the University North Park shopping district. In those cases, the sales tax was not new tax revenue. That brings the total sales tax paid to the general fund from the UNP TIF district to more than $16.5 million.
The ad valorem revenue generated by the UNP TIF district is more than $7 million. That money is split down the middle with the TIF improvement portion equaling $3.5 million and the rest being divided according to millage by Norman Public Schools, Cleveland County, Moore-Norman Technology Center, Pioneer Library System, the city of Norman, and the Cleveland County Health Department. The lion’s share — just over $2 million or 61 percent — was paid to Norman Public Schools.
Those ad valorem taxes were cumulative through 2013 collected on properties built by Dec. 31, 2011, assessed in 2012 and with taxes payable in 2013.
At the beginning of the UNP project, the anticipated total ad valorem tax was estimated at just more than $6 million. Ad valorem collections in the TIF district are 14.5 percent above expectations.