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.

Contact Dave Miller at dmiller@kdhnews.com or (254) 501-7543

(9) comments

geotechy

Good ideas! The city should also cut the lavish pd Christmas party, GIS day, KVI contributions, and clean up the purchasing department which is currently valueless.

Alvin

This is the personal opinion of this writer.
Well I have something that could be of benefit to the citizens of Killeen and it refers to the project that concerns the new water plant being built at the Stillhouse lake. When that project was 'pushed' through the council, it was stated at the time 'we were running out of water meters and it was contingent on the city to get that water plant done ASAP. We were told that 'there would be I think it was 30 MGD to 35MGD and that would 'take care of us for the next 30 to 40 years.
Now since the Georgetown fiasco, where do we stand on the water issue? Do we or do we not have the promised MGD and for how long is that MGD committed to the city of Killeen.
I have asked about the status of the designated water plant but have received no answer. It's been 2 years now and not a word has been said about it so I'll try again. What is the scheduled design, Engineering, and construction, and the estimated completion date for this facility?
As a concerned citizen, an update would be appreciated.
This is the type of question I would seem to think that would be beneficial in the quest for controlling the budget. Is the water plant still in the Engineering,Design,Construction activity or have they stopped working on it and it has been stopped, how much of the committed money is left on that project?
One on the 3% who voted.

Alvin

This is the personal opinion of this writer.
@Citizen360: Great, now ya'll keep it up. These are some good ideas and suggestions. Let's have some more.
Like @citizen360 has said, 'It's time for thinking outside of the box'.
I like to refer to this as 'Brainstorming'. You'll never know what you can develop from 'Thinking outside of the box'.
One of the 3% who voted.

Citizen360

Great article! And the part about cutting the $2+ million dollars that the City gives each year to the Chamber and KEDC is a great start. I would also look at cancelling or amending the Fleet Replacement Program, holding off on equipping Fire Station 9, cancelling unnecessary contracts like ZIP Cleaners, doing away with unnecessary high salaried positions (Director of Support Services, Public Information, Parks & Rec, etc) and cut the annual $100,000+ that Code Enforcement spends every year mowing grass. That would get us pretty close to the $8 million. I would also take a hard look at possibly foreclosing on properties that the City has high dollar license on for blight abatement. Those properties, once foreclosed, could be sold for a profit and help spur redevelopment. Time to think outside the box!

Alvin

This is the personal opinion of this writer.
@KilleenResident69: Sounds like you are too keen on doing the job that most of us wish would be done by the interim city manager, the council, and the mayor.
But seriously, have any of you noticed the line item, Solid Waste: $0.82 in the Black. Now if I remember correctly it has been stated many times how the Recycle is not 'operating in the Black, but operates at $10 dollars/month/patron in the Red'. How then does this happen if it is not 'borrowing from Peter to pay Paul'. How many other entities is that being done?
You will notice that for the period of 2009 until 2015 this city budget has lost $16.11 million dollars of our money. I say this because 'This city has not been doing the job of steward to the city of Killeen'.
How can the interim city manager on Tuesday sit quietly in the hopes of getting a big fat 23$ raise and then turn around 2 days later say ''The city of Killeen needs $8 Million of which $6 million is going towards the KPF and KFD with no mention of where the remainder is going to go.
It is my opinion that this interim city manager needs to follow through with the detailed city budget so we can see 'where it is going'. Until that is done, there is no need of extra cost for the 'hiring of any outside help, if it is not detailed in a city budget'. To do so would be a waste of time, in my opinion.
I ask you to 'think about it'. What is the use of going into a huddle, in closed door secrecy if all of the marbles are not put forth on the table'? In my opinion, you of the council are just spinning your wheels and getting nowhere, the same as the council going ahead and authorizing the removal and replacement of the DPS, without all of the information being presented to you before hand. You did not have the necessary information to make an accurate judgment, only a judgment that this city management 'guided you to make'.
Only you can set this city government straight and it take some heads to roll to accomplish this.
One of the 3% who voted.

KilleenResident69

Why do all of my fellow fiscally-responsible republicans have such a hard time making sound financial decisions? Slash the budget, fire most city employees and get rid of property taxes.. I'll take 100k to do that job.

Realist10

@Alvin and @Maxx you are correct in your opinions referencing the 'article' 'The City Needs $8 Mill.'
The City must start by initiating a forensic audit aligned with bringing in a seasoned interim city manager for up to one year from the agency the city is currently seeking to hire a city manager. This seasoned interim city manager can begin by doing many of the unpopular things needed, get rid of those involved with collusion, freeze positions through attrition, scrub bond funds--reading bond ordinances and using funds accordingly for capital if allowed, validating master plans aligned with rate studies and financial models, zero base budgeting by reviewing any waste and cutting unnecessary funding out, etc.

Eliza

Another reason for a State Auditor to be requested by even 1 of the council, is since Grants have been requested especially for Law Enforcement----
It should be verified that those Grants , were and are only used for the Purpose Intended !! This needs to be seem to fin the Interest of the Tax Paying Citizens !

Eliza

@ Killeen needs $8 million !!!!!!!! ------

I guess that answers the question to any Pay Increase for ANY city employee.----
And if the person who OK'd the $89,000 repair by city employee relative will have to be closely looked at by the council and approved before anything absolutely not needed is approved.
Maybe Shine will be willing to give up some of the $10,000 increase she received from Morrison when he was given his position to another City Manage after the pay off to the prior City manager of over Half a Million Dollars.----

It is a good idea of Councilman Johnsons to have a more open form of government, when spending the only Revenue the city has , the Tax Dollars and anything that is borrowed against the Tax Payers name.
Since someone hasn't been doing the job they have been getting paid for in the protection of Tax Money.

The citizens have been getting robbed ,and shot up drastically in the last year. The City and its owners (the Tax Payer) need protection in the worse way, but do not have anyway to get that UNLESS ,Grants are applied for so they are told,
Knowing this ,city employees still step forward and ask for an amount that will equal over $30,000 pay raise !!!!!!

Thank you Councilman Johnson for helping bring it to the people attention of the dire need the people of Killeen are in.

I suggest having a State Auditor come in and do and Audit on the Tax Money of the People

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