COPPERAS COVE - Copperas Cove City Manager Ryan Haverlah will present the City Council with the 2021 fiscal year budget on June 2.
At a workshop meeting on Tuesday, Haverlah and city Budget Director Ariana Beckman told council members that the revenues in the city’s general fund budget were less than the money the city wants to spend on operations, salaries, equipment purchases, and capital projects.
Moreover, the city’s staff is unsure of the impact COVID-19 might have on sales tax revenue in June and future months. A sharp drop in those numbers would have a definite impact on the current budget, but the impact on the next budget is still unknown.
Beckman showed councilmembers that the city’s projected fund balance going into the next budget cycle is nearly $6.44 million. General fund revenue for the 2021 fiscal year is expected to be $17.32 million. However, anticipated expenses going into the meeting were budgeted at $19.86 million, a $2.53 million deficit.
City Manager Ryan Haverlah stressed that the projected budget meets the city’s operating needs, with no cuts to services offered to residents. He also said the city has adopted prior budgets with general fund deficits, using the fund balance to help make up the difference. While Haverlah said the city council has steadily reduced the amount of the fund that’s been used, the goal is to have a budget that balances revenue and expenditures without using the fund balance at all.
However, the city council has identified several priorities that it wants to see accomplished in the upcoming budget year. Projects like abating asbestos and then demolishing the old Police Department building, adding new employees at the Fire Department and Parks and Recreation, and a cost of living adjustment of 2% for city employees were all discussed at earlier meetings and included in the budget projections for 2020-2021.
Moreover, Haverlah reiterated his goal to implement salary increases to help retain city employees. He told the council that the city goes to the expense of hiring training employees like police officers, only to see them leave for higher paying positions in other communities.
In hopes of closing the gap, Beckman said the city’s Budget Committee had met and recommended operating adjustments that would subtract $1.54 million from that deficit. Among the cuts recommended were nearly $500,000 to hire six new firefighters, about $180,000 to hire five new park laborer positions, and just over $148,000 to demolish the old police department building. The city would also cut a cost of living salary adjustment in half, saving $129,381.
If the city council adopted all the suggested cuts, the deficit would drop to $993,022.
City staff offered some suggestions to close the gap even further, including raising the property tax rate by one cent, generating $125,451; eliminating the city’s homestead exemption, generating $232,288; implementing a $3 transportation user fee for all city utility customers, generating $504,000; and reducing a step pay plan for the police department from 2.5% to 2.0%, saving $71,721.
Haverlah explained that only $200,000 of the money raised by the transportation fee would go toward the general fund, with the rest set aside for street maintenance needs.
Haverlah and Beckman said they were looking for direction from the council on whether they wanted to accept, reject, or modify the recommendations being made.
At least two council members voiced support for using the fund balance to close the gap in the budget without further reducing spending on the city’s top priorities. Councilwoman Joann Courtland said the council might just have to “bite the bullet” and use the fund balance to ensure that the city can retain key employees. Smith said the COVID-19 outbreak has created an emergency, which is one of the reasons the city has a fund balance. He also felt the city could use the fund balance to close the gap in the budget, as long as the amount did not drop below the ideal fund balance that Haverlah and the City Council have sought to maintain.
Council members discussed restoring at least two of the park laborer positions and moving the cost of living increase to 1.5%. Haverlah said he would take the council’s discussion and direction on the general fund into account as he puts together the full budget.
Because the general fund discussion took up more than the hour scheduled for the workshop meeting, Haverlah attempted to move quickly through the other fund budgets the council will consider beginning in June. The water and sewer fund has a $17,789 surplus, according to the worksheet presented at the meeting. That includes a 5% projected increase in both water and sewer revenue.
The Solid Waste Fund is projected to have a $224,475 deficit, but Haverlah asked council members to let that gap remain to complete needed hiring and salary increases. Haverlah noted that the transfer station is currently at full capacity and cannot increase processing of the city’s trash without additional employees and facility improvements. The Solid Waste budget also includes a 5% project increase in revenue over the next year.
The golf course fund and the drainage fund both showed surpluses and no changes were recommended.