City looks to pare its $2 million cash balance

Published 12:00 am Wednesday, April 30, 2008

By MIKE FERGUSON

Baker City Herald

The Baker City Budget Board started talking dollars and cents Tuesday evening.

The dollar figures discussed are still fluid andquot;pro forma,andquot; in the words of City Manager Steve Brocato, figures that will probably change slightly between now and the first public hearing on the budget, set for 6 p.m. May 15 at City Hall.

andquot;This is not a budget,andquot; said Alan Blair, Budget Board chair, andquot;but a pattern of what the budget will look like.andquot;

The figures as proposed show anticipated 2008-09 expenses of $5,059,103 and anticipated revenue of $4,471,000. The revenue estimate is conservative, Finance Director Jeanie Dexter said.

The disparity means the city will have to spend down some of what Brocato calls andquot;working capitalandquot; the city’s June 30, 2008, unappropriated ending fund balance, which will be at least $1.8 million and could be as high as $2.1 million, Dexter said.

The city’s main revenue sources property taxes; fees for services, such as issuing building permits; and franchise fees could all go up next year, Brocato said.

andquot;We bet that last year (the 2007-08 fiscal year) and we won,andquot; Brocato said, and that scenario could well play out again in the coming budget year. andquot;This budget is padded with conservatism.andquot;

In his pro forma budget, Brocato calls for the ending fund balance to total $1 million by the end of the 2008-09 fiscal year a goal the Budget Board has endorsed. City government needs about $700,000 of that million dollars to pay its bills between July 1 and the collection of property taxes in November. Property taxes account for about 23 percent of the city’s revenue, Brocato said.

But it may well be that the city needs even less savings than that, Brocato said. Brocato said he and Dexter will perform a cash flow analysis this fall to determine how large next year’s ending fund balance needs to be.

Further complicating the budgeting process is the fact that Brocato is in negotiation with the city’s three unions, who represent police, fire and public works employees. Those contracts expire June 30, and Brocato isn’t sure how much pay raises for union workers will affect the budget under consideration and those to come.

Whatever contract the parties and the city agree to will cost at least $20 million over five years, Brocato said.

While he did not want to discuss the negotiations publicly, Brocato did say andquot;both sides are very cooperative, discussing it, and taking a lot of time. That is the only way to handle our biggest budget item.andquot;

Including a $415,000 payment for the new Police Department headquarters, the pro forma budget has $140,897 left for non-recurring expenses. Those proposed one-time-only expenses include purchasing specially designed financial software ($15,000), a reserve fund for the D Street project ($120,000), airport maintenance ($27,500), $10,000 for the golf course parking lot and $22,500 for City Hall windows.

Another non-recurring item is a year-long, $33,041 planning assistant to help Planner Don Chance rewrite the city’s planning code. Chance is trying to find a college student studying planning to spend a year in his office, Brocato said.

andquot;It is worthwhile to have a student come in to accelerate code rewriting,andquot; Brocato said. That way, andquot;Don can farm it off to someone who costs one-third or one-fourth what Don costs.andquot;

The total in the proposed non-recurring expenses category is $326,958 more than twice what’s available.

According to Brocato, andquot;We won’t have the money for staff to duke it outandquot; among themselves before Brocato presents the proposed budget May 15. andquot;As far as I am concerned, we really don’t have much flexibility.andquot;

Brocato expects health insurance for city workers to rise 7.5 percent, or $52,000, in the coming fiscal year, and liability insurance to fall by about $35,000 annually if the city is as successful as it’s been in the past few years managing the number of claims filed against the city.

The Oregon Bureau of Labor and Industries has advised the city that a cost-of-living indicator is up 4.3 percent this year, Brocato said.

It all adds up to a andquot;wake-up call for this committee,andquot; Brocato said.

andquot;The longer we maintain inflation that high, the sooner it will hit us,andquot; he said.

Reach reporter Mike Ferguson at 523-3673 or mferguson@bakercityherald.com.