Council looks at 5-year financial plan

SIDNEY — The city’s new five-year financial plan predicts moderate growth in the income tax, an increase in existing fees, some staff additions and several street and capital improvement projects.

The financial plan was introduced by Finance Officer Ginger Adams during Sidney City Council’s workshop session, Tuesday night.

During the plan overview, Adams touched on the city’s revised 2017 budget. Earlier this year, the city was informed by a local business of its intent to change the way it files its consolidated tax return. That affects the city’s revenue, which is generated from direct collections from businesses’ profits. The city’s revenue is generated from municipal income tax collections by withholding taxes from people working within the city and from direct collections. The direct collections revenue derives from a volatile source, Adams said. It results in a projected decrease of 11.3 percent of income tax collections for 2017, compared to 2016.

However, the average annual growth for years 2018-2022 is projected to be 2.86 percent in the income tax, which supports the general fund. This will allow the addition of two full-time staff and several part-time and seasonal positions to be filled. Many other future hires proposed in the plan would be contingent upon renewal of the tax levy. These are for Sidney Fire and Emergency Services positions for proposed fire station No. 3.

Proposed full-time staffing changes are for the addition of an assistant court administrator in 2018 and a wastewater treatment plant operator in 2022.

Among proposed part-time staffing changes would be adding a water plant operator-in-training in 2018 (0.75 FTE). This would alleviate overtime and reduce staff turnover. Also proposed are to increase part-time Shelby Public Transit drivers’ hours (1.00 FTE) in 2018 and add a maintenance worker for the service center building (0.25 FTE) in 2019.

Proposed seasonal staffing include biennial curb painting (0.92 FTE in years 2018, 2020 and 2022) and building and grounds maintenance help for the water and wastewater treatment plants (0.23 FTE for each building).

Other full-time proposed staffing changes, pending levy renewal, are the addition of three firefighters for fire station No. 3 in 2020 and four additional firefighters in 2021.

With all these staffing changes, the city’s staffing level still would be 6 percent lower in 2022 (229 FTE) than it was in 2008 (243 FTE). The city cut employees after the 2008 economic downturn.

As the state has continued to cut revenues it used to share with local governments, the city has increased its dependence on the income tax. In 2007, the city received $1.7 million from the Local Government Fund (LGF), tangible personal property tax reimbursement and estate tax; in 2016 it received $414,000. Approximately $30,000 of the LGF annually was moved to drug addiction programs. Adams said that revenue that supports the city’s general fund is unlikely to return and the remaining distributions are at risk.

The city could face even more funding cuts if the state legislature passes a proposed “pay where you live” law for income taxes. If that happens, the city would lose $6 million to $7 million annually, plus $1.25 million that has been designated for street improvements, Adams said.

Adams reviewed street, cemetery, stormwater, water and several other funds. She also presented operating and capital cost information about the proposed fire station No 3.

Regarding stormwater, the plan proposes increasing the current stormwater fee that covers operating costs by 30 cents per equivalent unit. Currently it’s the lowest rate in the state. The revenue could be used for stormwater capital spending; that currently is funded by income tax dollars.

The proposed north-end fire station would begin in 2020 with nine employees, seven paid from levy proceeds and two from the general fund. It would be located on the 11.5 acres of land the city purchased in 2016. Estimated cost to build the station is $3.5 million, with $1.4 million estimated for the furnishings and equipment.

Some discussion ensued about the concession stand fund. The expectation was for the concession stand to be self-supporting by the end of 2016; this has not happened yet. The plan predicts it will deplete its initial capital infusion by the end of 2019, so staff is considering other options if concessions cannot break even by the end of next summer. It was suggested to possibly replace the stand with vending machines. This is something council may look into in the future.

Residents will see an increase in their city utility bills (water, sewer, stormwater and refuse). A low-volume user is anticipated to pay $54.55 per month next year, an increase of $1.82 per month in 2018. The figure for the average family of four will be $110.24, an increase of $3.50 per month in 2018. Adams said this includes the increased stormwater fee.

Cundiff reviewed the list of capital improvement projects planned for the next five years. Total spending in the capital improvement fund is budgeted to be $24.6 million.

Street, traffic and bridge projects total about $16.5 million; 23 percent is primarily funded through grants.

The largest capital improvements are $2.6 million in parks improvement projects, including relocating and renovating a historic bowstring bridge to Tawawa Lake, installing a walking trail around Robert O. New Park and creating a park in the Stewart subdivision, among others.

There was some discussion about in which order some of the parks projects should be prioritized. Council will further deliberate questions during the plan’s review at the Sept. 11 regular council meeting. It will be considered for adoption on Sept. 25. The plan will be reflected in the 2018 budget ordinance that council will consider at the Nov. 27 meeting.

By Sheryl Roadcap

Reach the writer at 937-538-4823.