NORMAN — Norman’s General Fund balance was $12.6 million following Fiscal Year 2008. At the end of FY 2014 that fund balance is projected to be $849,149 — a 93 percent decrease in six years.
City Finance Director Anthony Francisco said this week total city expenditures will again exceed total revenue in the proposed FY 2014 budget. While the Norman City Council is required by state law to approve a balanced budget, the city has been balancing its budget in recent years using carryover from the previous years’ accumulated General Fund.
“We’ve been drawing that (General Fund Balance) down over the last few years,” Franciso said.
The $12.6 million the city had accumulated in 2008 is “about what our general fund balance should be,” Francisco said.
The General Fund balance does not include roughly $1.5 million the council has set aside in the city’s Rainy Day fund.
“It doesn’t change the general dynamics that the fund balance is down,” said Mayor Cindy Rosenthal, “Coming out of the recession, we have been spending more than we have been bringing in, but the 2008 figures are before we separated out the PSST money.”
Currently, the Public Safety Sales Tax money is maintained in a separate fund and is used for specified police and fire personnel. Additionally, PSST money is paying for some badly needed equipment purchases and the construction of Fire Stations No. 8 and No. 9.
The PSST fund does have some excess money that is being reserved for salaries, pending its renewal when that special tax expires in 2015. Currently, the PSST fund balance is $9.4 million.
The city has budgeted to replace the computer aided dispatch system, renovate the Smalley Operations Center on Lindsey Street, buy a new fire boom truck and a a new fire pumper during FY 2013 out of PSST funds. Additionally, several trucks and other fire apparatus are budgeted to be purchased in FY 2014.
Even with those purchases, the anticipated PSST fund balance at the end of FY 2014 is over $8 million.
The Council Finance Committee began budget discussions in September, did a mid-year review in January and will be looking at the various funds now through June when the city council will consider the final budget for adoption.
“An annual budget must be adopted by the city council at least seven days before the beginning of the new fiscal year, certified by the Cleveland County Excise Board before the start of the fiscal year (July1) and transmitted to the state auditor and inspector within 30 days of the start of the fiscal year,” City Manager Steve Lewis wrote in his introductory letter to the budget. “The FYE 2014 budget has been prepared in an environment of great uncertainty in the local and national economy. We are at a point at which critical decisions have to be made...”
The total budget for all city funds last year was $204,970,419. The budget proposed for this year is higher at $225,173,779.
This year’s budget is inflated by “anticipated costs for major capital projects,” Lewis said.
Those include wastewater (sewer) and water utilities improvements, some of which are required to meet Department of Environmental Quality Standards.
The general fund includes employee wages. Several positions have been held vacant since 2011 including three positions in park maintenance.
“We’re very lean and mean,” Francisco said. “We’re very small government.”
The FY 2014 total revenues are projected at $216,466,151. Total expenditures are projected to be $225,173,779.
Francisco said the Finance Department tries to be conservative in its projections with the hope that revenue will exceed expectations. This previous year, revenue has tracked fairly closely to projections despite a disappointing sales tax increase of about 3.3 percent rather than the 4.2 percent increase predicted. Other revenue sources have helped to make up that difference, but may not have entirely closed the gap.
Until the final tally, those numbers remain uncertain.
Like most Oklahoma municipalities, Norman relies heavily on sales and use tax — a highly volatile revenue source. Norman’s percentage change in sales tax from year to year, when graphed, echoes the 10 year history of the Consumer Price Index, following national economic trends.
Some cities, such as Edmond, earn additional revenue from electric utility sales. Norman’s enterprise funds — operations financed and operated like a private business — include water, sewer, and trash. But those funds operate based on rates that are only increased by voter approval. Rather than generating income for the city, those revenues meet the basic needs they are designed to cover but may not cover major capital improvements.
The Finance Committee discussed the General and Special Revenue funds budget this past week. Enterprise funds will be discussed in the council study session on April 23, while capital funds will be discussed on May 7.
A public budget hearing is slated for May 28, and the council will consider the budget for adoption on June 11.