Editor's note: This editorial has been amended regarding the requirement for a minimum fund balance.
The city of Killeen is facing a serious revenue shortfall.
How big a deficit depends on how you look at it, but interim City Manager Ann Farris told a City Council workshop last week that the city needs to find $8 million to balance the 2016-2017 budget.
She also put the ball in the council’s court, telling members they were facing some hard choices. Those choices likely will mean a property tax increase, as well as potential cuts in staffing, programs and city services — none of them popular options.
Council member Jim Kilpatrick suggested covering the shortfall by dipping into the city’s general fund. But that won’t solve the problem. In fact, drawing down the general fund is one of the reasons the city is facing the current dilemma.
For several months, the Herald has been calling attention to the city’s falling fund balance and its incomplete reporting on city finances. With city ordinance calling for at least 22 percent in reserve and the city's bond rating potentially at stake, the declining fund balance was a legitimate public concern.
Yet, time and again, city officials — including former City Manager Glenn Morrison and former Mayor Scott Cosper — insisted the city’s financial health was strong, and that the Herald was looking for problems where none existed.
Concerned council members such as Jonathan Okray repeatedly raised questions about large expenditures, but city officials and staffers offered blanket assurances that the city had adequate funding.
Other council members, such as Kilpatrick and current Mayor Jose Segarra, asserted it wasn’t their job to micromanage the budget — that they trusted the city manager and city staff to do the detail work.
Now it appears the city’s financial health has been less rosy than advertised in recent months.
The big question is, why is the council just now being told about the problem — especially since the proposed 2016-2017 budget is scheduled to be presented in the next two weeks?
Farris has overseen the finance department since she joined the city administration as an assistant city manager in January 2013. Certainly, the numbers she shared with the council on Thursday didn’t suddenly emerge and catch her by surprise.
The fact that Farris is just now informing the council about the shortfall would seem to indicate that either she didn’t pay adequate attention to the city’s financial situation until recently, or that Morrison was keeping a lid on some of the information before his retirement last April.
Either way, council members aren’t getting much of a heads-up on the problem — a problem that was created by previous councils and city administrators, but one they must deal with nonetheless.
And it’s not a one-time problem, either.
Farris’ PowerPoint presentation featured a graph that projects a nearly $11 million disparity between annual revenue and expenditures by 2020, with the unassigned fund balance falling to zero by 2018 and going into negative numbers thereafter. The same holds true for several of the city’s enterprise funds.
Obviously, something must be done to prevent this scenario from becoming reality.
Farris told council members that “everything is on the table” when it comes to aligning the budget.
If that’s true, it’s time to get serious about the city’s spending priorities. No more rubber-stamping big-ticket projects, put an end to open-ended, no-bid contracts and remove automatic funding formulas for outside agencies like the chamber of commerce and Killeen EDC.
Ultimately, the current budget crisis points to the need for the council to recruit and hire an experienced city manager with a strong financial background.
While the council, current staff and administrators may succeed in putting a Band-Aid on the problem for the coming fiscal year, it’s going to take new management — and a new approach — to move the city onto a solid path for the future.