Council hears proposed FY 2020-21 budgets

May 19, 2020

“Panic buying” just prior to the implementation of Covid-19 mitigation measures going into place in March helped secure solid sales tax returns for the month, but it was the foresight of past and current city councils in establishing the Stabilization Reserve Fund — which currently holds just under $5 million — that is to thank for the City’s projected ability to weather upcoming financial hardships created by the pandemic, CFO/City Clerk Jason Muninger told the City Council on Monday.

Sales tax

During a special meeting on May 18, Muninger told the council that May sales tax receipts saw an 11.5 percent bump due to “panic buying” caused by the public rushing to retail stores to stock up prior to mitigation measures going into effect in March. This increase will help in the short-term, but the City’s Stabilization Reserve Fund, which was established by the City Council following the 2008-09 recession to help bolster the City during times of economic crisis, helped move the City into a unique position as the country braces itself for a projected sharp economic downtown.

“This fund has allowed us to go into the upcoming fiscal year with a budget that maintains our operations and current service levels,” Muninger said, noting that while the budget does not include funds from the stabilization reserve it allows City staff to propose a fairly flat budget in knowing the funds could make the difference if projections fail to hit the mark.

“No one knows how this time of extreme uncertainty will affect municipalities — all we can do is make educated guesses,” Muninger said. “I feel confident we are well prepared to weather any storms ahead, but this fund will ensure that we are. We’re sitting in a good position as we go into unchartered territory.”

Funding sources

The City of Bartlesville relies primarily on two sources of funding: Sales tax revenue, which is used to fund City operations, and Enterprise funding, which is revenue derived from fees that are collected through the City’s three Enterprise Funds: Water, Wastewater and Solid Waste.

The City receives several other sources of funding as well, including the voter-approved 1/2-cent Capital Improvement Projects tax and the 1/4-cent Economic Development tax, both of which are sunset taxes and budgeted separately following the start of the fiscal year. Bartlesville also has a 5 percent hotel/motel tax, 60 percent of which helps fund the Bartlesville Community Center and 40 percent of which is used to fund the Visit Bartlesville, the tourism arm of the City. A small portion of property taxes (15 mils) for General Obligation Bond projects, also approved by voters, is also collected.

Proposed 2020-21 budget

The City’s operating budget for the 2020-21 Fiscal Year was prepared with two goals in mind: To preserve as much of the stabilization reserve balance as possible and to preserve the City’s current service levels if possible.

“It is critical that we preserve the stabilization reserve because we do not know what the future will look like in Bartlesville for the next 12 months, two years — or even 10 years,” said City Manager Mike Bailey. “Maintaining current service levels is equally important because unlike many businesses, the demand our services only increases during times of crisis. Add on the additional burdens of operating in these very strange times, and it became clear that we needed to maintain our staffing levels to help meet this uncertainty.”

General Fund revenues are projected to fall significantly next year with sales tax expected to plunge upwards of 4.3 percent, or $814,000. Other revenues are expected to be negatively impacted as well, Bailey said.

In anticipation of this downturn, the proposed budget does not include employee pay increases or include new positions, other than a school resource officer whose salary is primarily paid by Bartlesville Public School District.

The budget also does not include new utility rate increases despite deficits in Sanitation, although water rate increases approved in 2016 will go into effect on July 1. Bailey said Sanitation will run at a deficit but will maintain a positive fund balance due to capital transfers being reduced.

“This will impact automated truck replacement in the future, but we did not want to increase these rates during the current economic crisis,” he said. “This will require us to keep the trucks longer or play catch-up with future rate increases.”

Utility rates

Utility customers can expect to see an increase in water rates over last year as the last in a series of five phases of increases become effective on July 1. The increases were approved after a 2014-15 study revealed additional funds were needed to sufficiently support the operations of the system. New capital fees were also implemented to support mandatory improvements to the system, and an inclining block rate structure was added to encourage conservation.

“For the average utility billing customer who uses about 6,000 gallons of water per month, it’s going to be an increase of about 7 percent,” Muninger said. “That means the average customer should see their bill increased by about $4.60.

Capital Improvement Projects (CIP)

The City’s Capital Improvements Program fund is provided through the half-cent sales tax voted on by Bartlesville residents every seven years. The last election was held in 2013 and if not renewed will expire next year. The tax has generated $75.6 million since 1999, about half of which has funded street improvements. The funds are also used for facility upgrades and park improvements as well as drainage, water and sanitary sewer improvements.

The current proposed budget includes $4,260,968 for new projects funded via the 1/2-Cent Sales Tax fund and also proposed projects from the Wastewater Fund, the 2018 General Obligation Bond Fund and Capital Reserve Fund.

Carry-over projects from the 1/2-Cent Sales Tax fund total $2,816,633. Additional carry-over projects consist of the committed capital funding for previous fiscal year projects that have not yet been encumbered. Those additional funds include previous G.O. Bonds as well as the City Hall Fund and Storm Water Fund.

“These remaining funds are typically carried over due to a lag between when funds become available, time to design the project, and then the bidding process, though other factors can affect the timing of funding as well,” said Director of Engineering Micah Siemers.

Projects and equipment set for funding next year include:

  • Hillcrest Drive construction
  • Jennings Asphalt Rehabilitation
  • Pathfinder improvements
  • Sooner Pool recreational expansion
  • Library HVAC upgrades
  • Quail Place Tributary project
  • Cooper Dog Park parking lot repaving
  • Johnstone Park restroom remodel
  • Johnstone Pavilion Splash Pad
  • Preventative street maintenance
  • Candlestick Court and Eighth Street storm drainage projects
  • Street department equipment
  • Fire department equipment
  • Police department vehicles
Overview

Overall, despite unprecedented economic changes in the national economy, the City of Bartlesville is prepared to meet the challenges next year could bring, Bailey said.

“We are in very fortunate circumstances as we enter this next year — or years — of uncertainty,” he said. “Our sales tax revenues for the current year were greater than anticipated and these excess revenues have helped to cushion the expected blow to revenues in the upcoming budget. Our stabilization reserve will help us to endure not only the next year but for many years to come. Many cities in this state would be envious of our position right now, and I am grateful that our strong financial position is allowing us to weather this storm without draconian employee/service cuts.”

Next Step

A public hearing will be held during the council’s regularly scheduled meeting on June 1, when the council is also expected to consider adoption of the budget. It is likely the June 1 meeting will be held in-person at City Hall, 401 S. Johnstone Ave., rather than videoconferencing which is currently being utilized in accordance with Senate Bill 661.

Once approved, the budget will go into effect on July 1, 2020 and expire on June 30, 2021.