During the Oct 8, 2019 City Council Work Session staff provided this assessment of the City's financial status which includes the prediction that they will run out of money in the General Fund in 2024. Below is a excerpt from the meeting. You can watch the entire discussion by going to the City's Website, then clicking on the video link labeled City Finacial Forcast.
|When we look at operational expenses only operational expenses only we will begin consistent deficit spending from the general fund starting in 2023
and at the rate of deficit draw against the general fund this model predicts a zero-zero general fund balance towards the end of 2027
When we factor in the capital improvement plan
And the capital improvement plan that we used was the one that was presented to Council earlier this year
So it covers the span of 2020 through 2024 when we insert all of those capital items into this model
We continue deficit spending beyond 2019 so we're in a deficit spend prediction for 2019 based on what councils already approved.
We will continue to definite deficits spend and that trend will deplete the general fund balance somewhere in 2024
Some of us have been waiting since October for Council to get and present more information on how they intend to proceed. The April 21, 2020 Council Work Session contained an agenda item titled Review of City Operations and Economic Sustainability. You can listen to the entire presentation on the City Website. The main take away is the prediction that the city will lose about 10% of all revenue and 5% of operational revenue because of the economic consequences from the Corona virus response. Though they do not repeat the forcast from October, they stated the city is on the same path in providing services as they were before the Corona virus.
Needless to say, I was disappointed that we are still in limbo in getting an intelligent discussion by council and a plan that would help prevent the October predictions. In fact, since October when staff warned council that their deficit spending on Capital improvements was driving the projection of going broke from 2027 to 2024, council spent $3.7 million unbudget dollars mostly from the General Fund to purchase two parcels in the Marion Shopping Center. Two parcels that had a total assessed value of about $750,000.
|Parcel 1 - County apprasial of 6139 Brandt Pike $575,610
||Parcel 2 - County apprasial of 6185 Brandt Pike $172,450
Most distressing is that during this past discussion there was only one good question from council which resulted in a response from the City Manager that can best be described as non-sense. The video below shows Ms. Bryge asking Mr. Schommer what would happen if the city were to lose the more than $700,000 of net profit he has been telling council the Music Center earns for the city each year. He responds that it will not impact the city because the Music Center also has expenses.
have we done any figures to determine what the impact will be if we miss a quarter I have for all of the Rose season since it's been such a good revenue generator
I don't know that our taxes are going to take a huge hit because of the paycheck protection plan
but those bother me I just I just wonder
have we done that kind of as a plan B to project if we lose part or all of those seasons
and any other revenue we regarding our our amenities that are shall I say
self-funded the Music Center the Kruger Aquatic Center starting with the Aquatic
Center if the Aquatic Center doesn't open then we don't have expenses so it kind of balances out
same thing to some extent with the Music Center as well if the Music Center doesn't open we're not you know producing shows
we're not renting equipment we're not doing all those things having staff and therefore the expenses aren't there we're not having to buy supplies so at the same
point that is that is going to happen if something is reduced in the amount of
time frame that we have to operate and open obviously that will affect it but
proportionately so how much does it cost to run and operate a month versus two months versus three months six months so it's just kind of a proportionate thing
we're very fortunate that we've structured our business models and those enterprises that allow for self sustainability that if you weren't actively using those spaces those spaces are properly taken care of you know the general fund doesn't pay the debt but if revenues do so the
impact for a delay or slowdown in that is not what people would assume it would be that all of a sudden we've got all of
these outgoing expenses quite frankly if
those facilities aren't operate then they don't have the same amount of expenses involved
There are quite a few things that could be written just about the response found in this one minute of video, but I told the wife I would keep the time to writing this article short. To complete my thought just on this one minute of discussion, I would have to look up the exact net profit the city said we made on the Music Center last year. Then see what percentage that is of the revenue going into the General Fund, Operating Budget, total budget. I would also comment that if the city were actually paying off the Music Center, it would amount to an expense of about $1 million a year. It is another of the City Manager's deceptions to claim that because the payments for the Music Center construction costs would come from the TIF revenues it would not affect the rest of the budget. These exact TIF funds could be used for street improvements or water projects. As the October discussion tells us, the City certainly has Capital Improvement projects that are draining the General Fund.
Obviously, there are hours of work needed in order to evaluate the two discussions that have already occured. As always I recommend you listen to the entire discussions and form you own questions.
Though, I can not spend the time on giving a complete outline of the question council should be asking, hopefully it inspires you to tell them this is important and we are waiting on hearing an intelligent conversation about the future of the City's financial health and their plan to achieve it.