Norman City Council is facing a potential deficit on certain capital projects in the equity fund, city officials say, amid potential revenue challenges.
During a Tuesday meeting on the capital fund and financial reports, the city’s financial services director Anthony Francisco told the council that the budget for new pay-as-you-go projects is expected to be – $ 650,000 by the end of fiscal 2021 and – $ 471,000 for the following year. The forecast for the fiscal year ending 2023 is not in the red with a forecast value of 1.4 million US dollars for new allocation projects.
“If the council wants to add projects beyond what we have in mind or propose, you’ll have to abandon another project to save money on the project you want to add,” said Francisco.
These projects are also known as pay-go projects and can include, for example, the replacement of equipment, drainage projects for rainwater or the maintenance of streets and sidewalks.
The negative projection is unusual, he said.
“When we are in this step in the capital budgeting process, the council usually has some funds to allocate to new projects, but the current status of the fund is negative,” he said.
Francisco told The Transcript on Friday that the negative position could improve as savings are expected from other current projects and he hopes revenue could improve.
Revenue for the city has fallen in several funds, including fines and foreclosures that are well below budget and “still below last year’s level,” he said.
During Tuesday’s discussion of the shortage of space tax funds due to the COVID-19 pandemic, Francisco seemed optimistic that fall 2021 could be a different story for that fund, too. As previously reported by The Transcript, most of the hotels were in 50% capacity or less during the height of the pandemic, and the fund was subsidized by the Council through funds from the Coronavirus Aid Relief and Economic Security (CARES) Act.
“We hope that we will recover at the beginning of the next fiscal year,” he said. “We assume that we will have full football stands in autumn 2021, which we are planning as the national championship season. We hope this will have a positive effect on our spatial tax fund. “
Some revenues have increased, such as the use tax generated by online trading and shipping. The city will levy $ 2 million more in use tax, while flat-rate sales tax revenues are only half 1% higher than expected, Francisco said.
“The general message I’d get from this on the revenue side is that it’s not as bad as we feared, but it’s not good,” he said.
With utility costs rising during the last two storms, franchise fee income is expected to be much higher.
“This impact on our ONG franchise earnings that is not yet visible, but I would suspect that it will improve our earnings to hundreds of thousands of dollars,” said Francisco.
Storms have also contributed to emergency reserve fund spending. The cost of storm debris removal is $ 6 million, he said. Upon an expected reimbursement, the city’s cost could drop to less than $ 1 million.
The cleanup was funded upfront from the general fund, Francisco said.
“We expect to be spending a 1% emergency reserve this year for the first time in a while, and we’ve already moved much of that to the road maintenance and public works department,” said Francisco. “All of these things together, we expect to end this fiscal year with approximately $ 1.2 million of our initial fund balance and end this fiscal year with approximately $ 2.7 million in fund balance. “
This balance falls below the city’s reserve policy of less than 3%.
“We will moderate that further,” he said.
The general fund “survives” but is unable to add new projects.
“At least this year, we do not assume that a fund balance will have to be reduced on a rainy day in order to save the general fund, as the balance is still above 1% of expenditure but below the reserve level of 3%”, he said.
As sales tax revenue growth has fallen below expectations with the advent of online retailers, some quality of life projects at the Norman Forward Sales Tax Fund have been scaled back. Several planned projects are underway, including the Senior Wellness Center, several park and sports improvements, and an indoor water and multisport center.
Meanwhile, other capital project challenges remain underfunded after failing a general bond in August 2020 to meet the drafts.
The council must decide whether it can find the money to complete an emergency and communications center of $ 16 million or build what it can afford with a funding gap of $ 9.5 million. City documents show the facility would have to eliminate 7,000 square feet and five shipping stations, with only that part of the building’s IT department hardened to withstand the harshest weather conditions.
While negotiations between the Norman Regional Health System and the city over a land swap continue, the council must also decide how a building will be used in 718 N. Porter. Station 3 Alison Petrone suggested that the Norman Police Department use it as a temporary communications center until the city can find the rest of the funds needed to build it according to the design.
The city continues to put out its dollars for fleet replacement, but is behind schedule, according to a study.
“You can see that we spend about $ 2 million a year on vehicle replacements,” said Francisco. “We should spend about $ 5 million to keep up to date, but that’s what we have and we’re doing the best we can.”
City manager Darrel Pyle said the city is still reviewing a leasing program and giving grants to some electric vehicles to save money.
Among other things, the employees drew attention to underfunded renovation work on communal complexes, outdated equipment for animal welfare, roads, bridges and the maintenance of the rainwater infrastructure.
Public hearings on the budget will take place on April 27th and May 25th.