Deficit Projected In City's 2016-2017 Fiscal Year Budget

The Glenwood City Council will be asked to approve a budget next week with the understanding that the deficit in its general fund account will be prolonged for at least another year.

A public hearing for the 2017 fiscal year budget and a vote for council approval will take place Tuesday, April 12, 7 p.m., at City Hall.

The proposed budget calls for the city’s existing tax levy rate of 13.58 (per $1,000 valuation) to remain in place.
Interim financial manager Clint Fichter, hired earlier this year to put together the 2017 budget and help analyze the overall state of city finances, said the proposed budget projects $3.875 million in regular revenue and $4.175 million in regular expenses.

“I believe they’re going to lose $150,000 - $300,000 depending on how the operating year falls,” Fichter said.
Fichter noted that the city council could have chosen to raise the property tax levy as a short-term solution to offsetting the projected shortfall, but the desire of the council and new mayor Brian Tackett is to develop a long-term strategy for generating new revenue and reducing expenses.

“The council may have otherwise raised the tax levy, but I think it was a situation where they could manage through this year knowing there was going to be a deficit, but it was better than having a kneejerk change to try to fix things we really hadn’t made an attempt to understand,” Fichter said.

Fichter, who was hired on a contractual basis following the January termination of former city administrator / financial director Brian Kissel, said after the 2017 fiscal year budget is finalized and certified with the state, he and city clerk Angie Winquist will begin a thorough analysis of the city’s financial situation and practices. The first priority for Fichter was to put together next year’s budget, which must be certified by April 15 (the city was given a one month extension past the normal March 15 deadline following Kissel’s termination).

“We’re going to go through things in more depth,” Fichter said. “We need to establish exactly how much cash they have. We hope to do that fairly soon by going through their accounting system and getting it implemented correctly so the council can get good reports.”

Fichter stressed the need for long-term solutions to the eliminate the deficit spending that’s plagued the city for the past three years.

“Truthfully, there isn’t a lot of fluff in the Glenwood budget,” he said. “Other than that aquatic center, they do very basic governmental functions. It’s all straight forward, but it looks like to me that in any given year, they’re going to have a $150,000 - $300,000 deficit spending, primarily concentrated in the general fund and the employee benefits fund. That’s inescapable because they just don’t have enough revenue to provide police, streets, parks – all that stuff.”
Fichter said he and Tackett expect to meet with all department heads in the coming months “to get a good sense” of what direction the city needs to go.

“Glenwood does not have a complicated city. There is no easy thing to cut. What the results of those talks will be is likely a mixture of things resulting in more revenue or cost reductions. It will be some process that will have to be gone through over the next year to get the budget sustainable for fiscal year ‘18 and put it on a path where it’s working every year.”

Tackett said expenses have been shaved as much as possible in putting together the 2017 budget and he doesn’t believe raising the property tax levy is the long-term solution to resolving the deficit.
“I’m not entirely convinced after talking with Clint that we’d be able to raise enough money without a pretty significant levy increase,” Tackett said. “His suggestion to us was to start exploring some alternative sources of revenue that aren’t property taxes.

“Our city is already way too property-tax reliant.”
Annexation could be a long-term solution to the city expanding its revenue base, but Tackett believes there are other measures that can be taken. He said he was “shocked” to learn the city isn’t receiving franchise fees from two major utility suppliers - Black Hills Energy and Mid American Energy.

“We have a franchise fee with Mediacom, but we don’t have those franchise fees with our utilities. Most towns our size do have those in place,” Tackett said. “I was really surprised that those weren’t in place and every other city seems to take advantage of those.

“I will be making the initial contacts on those to get the ball rolling and seeing how we can go about getting that done.”
Tackett, who took office in January along with two new council members, said the city’s finances won’t be corrected with a quick fix.

“I do believe it will take us a couple years to get things righted because the general premise at this point in time is to be selective about hiring a permanent replacement for our financial director and to train Angie up as a clerk so that she can handle a lot of the responsibility,” Tackett said. “Clint seems to be convinced that it would be a way to save quite a bit, something along the line of $80,000 a year.”