City Manager: What YOU need to know about Blackwell's budget
EDITOR'S NOTE: Things have changed a lot at Blackwell City Hall over the last year. One year ago, the city cut several staff positions due to budget shortfalls. A few months later, the city manager unexpectedly resigned. But now, one year later, things are different there – especially when it comes to budgeting. There's a new city manager and a new chief financial officer. Under their direction, the city of Blackwell has just entered into the 2019 – 2020 fiscal year. In order to bring you more information about what the city's budget will look like in the new fiscal year, we sat down with Blackwell City Manager Janet Smith to ask her how the city plans to improve infrastructure while also remaining financially stable. Here's what we discussed.
Q: Thanks for your time, Ms. Smith. The Blackwell City Council has passed the budget for the 2019 – 2020 fiscal year, which began July 1. What are some of the financial challenges the town will face this year?
A: There are more infrastructure replacement needs than the city can afford, so it will be necessary to pursue loan and grant funding in order to accomplish these repairs. Having a steady revenue stream through utility customers is the only way to be approved for large loan amounts. Last year’s increases proposed by the prior administration – which were of up to 37 percent – were significant. But this year, utilities increased only 2.1 percent. The city used the Consumer Price Index as a guide. This 2.1 percent increase is necessary in order to keep up with the growing costs of goods and services needed for upgrades and day-to-day expenses of operation. Residents will notice that other service providers, such as trash disposal companies and cable providers, also increase their rates yearly. Again, the city has to “qualify” for loans just like a normal person does, and revenues and expenses are used to determine the city's ability to repay loans.
Q: The budget for the 2019 – 2020 fiscal year will be the first budget you have crafted since you were hired as city manager earlier this year. What are some of the most important things you have learned about the city's finances in your time here?
A: The city manager is charged with making sure that all expenses are being paid for with the correct funds so that an accurate picture of the city’s expenses is seen. It will take some time to get these coming from the correct funds. Also, the Incode system has not been properly used for about five years. Now, extra steps have been necessary in order to provide accurate numbers to staff for day-to-day use. The inattention to Incode has also prevented the city manager’s office from being properly informed on balances.
Q: How will this budget be different from the city's budget for the 2018 – 2019 fiscal year?
A: This will be the first year without the “buyouts” for personnel whose positions were eliminated last year. The budget is a very conservative one so that the new chief financial officer and the city manager can properly look at revenues and expenses in order to gauge how to move forward. Capital improvement projects have been planned – totaling about $2.8 million – that will improve the city by replacing water lines, repairing roads, buying supplies for the fire department, demolishing properties, beautifying the city, and making improvements to parks and walking trails. Also, utilities have not been increased significantly as they were last year. This budget includes only a 2.1 percent increase for utilities except for trash collection, which included a 2 percent increase from Davis Sanitation.
Q: Does the city expect to have any financial losses in the upcoming fiscal year? If so, how much are they, and are any steps being taken to correct them?
A: Curbing expenses is the only way to get the city “back in line” so that spending is under control. Since much of this was done last year in the form of personnel cuts, there have been longer wait times for services to be performed by the city’s employees and staff – although they should be praised for working harder to meet the public’s expectations. This year, it was necessary to cut costs by paying only employees' costs for health insurance, thus reducing costs for the city by approximately $177,000. The budget shows an expected of loss of about $571,365.00 for Fiscal Year 2019 - 2020. That amount is significantly less than the $951,010 loss for Fiscal Year 2018 - 2019.
Q: What is the city's biggest expenditure, and which city departments will receive the largest funding allocations?
A: It is normal for municipalities to spend most of their dollars for employees' salaries and benefits. Typically, that total is between 75 – 80 percent, and the city is within that range. Providing essential services to residents in the way of day-to-day maintenance and operations, as well as trouble-shooting, is the task of each employee. Public safety is the largest department, and it includes police, fire, and ambulance services.
Q: Will any funds be set aside for infrastructure improvements in the 2019 – 2020 fiscal year? If so, what projects will those funds be used on?
A: Total capital improvements and capital outlay for this next year come to $2,801,100. Detailed information is provided on the “Total Capital Outlay Detail Budget” on page 39 of the budget. A significant portion of this amount will use Blackwell Public Trust monies that are allocated for specific purposes, and the anticipated amount is $936,000. Another $1.2 million of water improvements is being funded from a Community Development Block Grant (included is up to $450,000 grant funding if the project is approved). And, $500,000 of emergency sewer repairs are being funded with our Utility Reserve Fund. Any Federal Emergency Management Agency reimbursement received for the sewer project will be used to replenish this Utility Reserve Fund.
Q: Sales tax collections have been lower this year than they were in 2018. Will the city have to cut any staff positions in order to balance the budget?
A: The city has just been notified that Braum’s, which suffered a fire this month, will be reconstructing at its current location for approximately five months. Casey’s, which opened last year, will be upgrading and improving its interior for approximately one month. Receiving lower sales tax collections for six months gives reason to be extremely careful in the way funds are spent, but there are no plans to reduce the size of the workforce in order to accommodate these sales tax reductions. Management plans to find other ways to reduce spending.
Q: Will the city be putting the city attorney on a retainer contract in the new fiscal year in order to better control costs associated with his services?
A: The city attorney has been working more closely with the city manager to control the costs of legal services. Reduced rates for travel time have already been negotiated, and the attorney's scope of services has been better defined.
Q: In previous budgets, the City Council has had a line-item listing of funds to spend at their discretion. Is that going away?
A: There is a line-item list showing allocated funds for expenses related to the city attorney's and CFO's services. This is appropriate because the Council hires both, and because they are employees of the Council, according to the Blackwell City Charter.
Q: Is the city paying any kind of stipend to the Blackwell Economic Development Authority or Blackwell Industrial Authority each year for their services?
A: There is no money designated for the BEDA or the BIA in the budget. They are considered self-sustaining.
Q: The city has a higher rate for its hotel/motel tax this year. What will the city use that extra revenue for?
A: Currently, the hotel/motel sales tax collects about $202,000 per year. The sales tax revenue is then allocated to the Blackwell Tourism and Development Board, the Top of Oklahoma Museum, the golf course, retail attractions, and websites for the city and the event center. These allocations total about $182,500 for the year. If collections stay on target, the new tax rate could bring in about $72,000 more. Plans have been discussed with city staff to improve signage around the I-35 exits in order to attract travelers by providing information for the Geocache Barn Quilt Trail, the museum, and other local specialties. Also discussed are better signs on Main Street for “wayfinding” around the city. These signs will point the way to local attractions, including the county fairgrounds and the event center.
Q: Going forward, what can the city do to improve its budget-making process?
A: Capital improvement plans are vital to budgeting, and so is planning for large purchases several years out so that surprises are limited to emergencies only. Also, using the Consumer Price Index as the reference point for utility increases will assist management in streamlining the process. The CPI is calculated on a national level, and it is accepted as the standard for annual utility increases.
Q: Where can citizens find out more about the budget?
A: The budget will be uploaded to the city’s website this month, as it is now complete and ready to file with the Oklahoma State Auditor and Inspector General's Office. The city's web address is https://www.cityofblackwell.com/.
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