Budget talks for the Fiscal Year 2013 kicked off Monday, as City Council members met in a special committee discussion to begin reviewing Clinton’s financial outlook.
Finance Director Jessica Kinser led the discussion, which focused on three aspects of the total city budget. Debt service funds, which consist of judgements, general obligation bond interest and principal, and other obligated expenses, were discussed. Tying in closely were capital project funds, which are used for infrastructure projects and city department capital requests. Finally, special revenue funds, which constitute items that aren’t otherwise classifiable, were discussed.
The City Council will hold additional workshop sessions prior to the budget being finalized in March. The next meeting will take place from 4 to 6 p.m. Monday, and will focus on funds involving city personnel.
There are 16 different debt service funds. In total, they produce $3,740,833 in revenue with $4,143,698 in expenditures, for a net difference of $402,865. Based on the city’s financial outlook, Kinser has recommended a debt service levy of 2.03 per thousand in assessed value for the coming year, a hike from 1.39 per thousand this current year.
The debt service obligation for the coming year is about $4 million, an increase by about a million from the current year. Kinser explained that much of this is due to an increase in payments for a general obligation bond, which city leaders intentionally back-loaded in hopes of an expanded property tax base in the future, which never materialized.
Even with an increased tax levy, Kinser said the city is still well under the state cap, operating at about 39 percent of the limit. City Administrator Jeff Horne explained that accepted good practice for municipalities is to keep that under 75 percent.
The majority of meeting time was dedicated to capital projects, as representatives from several city departments presented wants and needs for the coming year.
City Engineer Jason Craft explained the city’s roadwork program that has been in place for a few years. Currently, local option sales tax funds provide a half of a percent for city street work, to the tune of about $1.3 million a year.
“I think that while (spending $1.3 million) is good, I think it’s good to talk about, is it possible to vastly improve these streets?” Craft said.
Previous city road spending was about half what is spent in the existing program, which allowed city infrastructure to fall into disrepair. With the current level of spending, the city can only keep things consistent, without offering any real improvement. While Craft said he plans to remain within the existing framework for FY13, he recommended the council propose doubling its road work expenses for six years, to hopefully bring more than 90 percent of city streets to good condition.
If such a program were adopted, Craft said, the city would be able to reduce annual expenses back to their current rate, and should be able to maintain good roads within that budget.
Craft hadn’t identified any funding sources, but explained that he and the Capital Improvements Committee wanted the council to be aware of his idea. The city could potentially vote to modify the local option sales tax, and reallocate funds used for property tax relief to the road repair program.
The fire and police departments offered breakdowns of their wants and needs. Police requests included forensic equipment to collect and analyze cell phone and computer hard drive data, as well as technological upgrades. The fire department requested new computers and equipment upgrades, but identified a new roof for the Chancy Fire Station as one of the immediate concerns.
At Large Councilwoman Jennifer Graf requested detailed breakdowns of costs of department wants and needs. Financial constraints will likely necessitate trimming of departmental wishlists, she said, and prioritized lists would help make those decisions easier.
“That way we’re completely cognizant of what we’re cutting,” Graf said.
Special revenue funds include several city funds that defy easy classification. They include a Summer Youth Activity program fund, which is self-sustaining, the gaming fund, which is revenue from Wild Rose Casino and Resort, and funds for tax increment financing districts.
One fund new to this budget discussion is the Assessment Appeal Reimbursement fund, which Kinser created to address the assessment dispute between Archer Daniels Midland and local taxing bodies. ADM contends the facility is a utility and is exempt from a large portion of the assessed value. Whatever agreement is eventually reached will significantly reduce the amount of tax revenue the city, local school district and county will get from the facility.
Also discussed was the Self-Supporting Municipal Improvement District, or SSMID, which covers much of the downtown. Properties in the SSMID voted to tax themselves to help defray maintenance costs and fund improvement programs. The City Council does not dictate what is done with the funds in this account, but by Iowa law, it must act as custodian.