City reviews budget, several funds take hit from COVID
COVID-19 is impacting the city’s budget, particularly in the recreation, events and parking funds where operations have been significantly curtailed.
But, one bright spot, staff told City Commissioners during their Jan. 19 work session, is that the city’s golf contractor, CourseCo, is making money and paying some of those profits back to the city, as stipulated under their contract.
So far in this budget year, CourseCo has paid $107,000 to the city, dollars that are helping reduce the golf fund’s $1 million debt to the general fund.
As of Nov. 30, 2020, CourseCo had generated nearly $300,000 more in revenue than fiscal year 2019, according to city financial documents. The city’s fiscal year runs July 1 through June 30.
That the golf program is generating revenue is “remarkable,” said City Manager Greg Doyon.
The contract with CourseCo was one of the city’s efforts to reduce reliance on the general fund, which is primarily tax revenue, for enterprise funds, such as the golf fund. Enterprise funds are designed to be sustained by user fees or other revenues within the city budget. The city has a number of enterprise funds, including several recreation funds, utilities, and parking.
CourseCo took over management of the city’s two golf courses in February of 2019 and fiscal year 2020 was the company’s first full budget year managing the golf program.
For the swimming pools fund, fiscal year 2020, which ended June 20, 2020, was the first full year of the Natatorium being closed. That meant lower revenues, but also lower expenses and the aquatics program was able to generate about 90 percent of its revenues from the previous year, even with COVID-19 restrictions, according to Kirsten Myre, city budget analyst.
Halfway through the current budget year, the swimming pools are seeing decreased revenues, but also dramatically lower expenses, according to Melissa Kinzler, city finance director, and so account has a healthy fund balance currently.
Smaller numbers for summer camps and events caused lower revenues for the recreation and Multisports funds, and cancelled events cut revenues for the Civic Center Events fund significantly, but they have fixed costs, so that fund is currently operating in the negative.
For fiscal year 2019, the Civic Center Events fund had about $101,000 in operating revenue. So far in the current budget year, operating revenues are down to about $9,000.
Kinzler said that so far this year, property tax collection has been on par with years prior so the general fund is healthy and has an infusion of about $11 million in CARES Act funds, but cautioned that the general fund peaks in December and June when taxes come in, but those dollars cover expenses throughout the budget year. This year’s tax collection was also healthier since the Calumet Montana Refining tax appeal was settled last year.
When there are tax protests or delinquent taxes, that means less revenue for the general fund, which supports city services including police and fire, some recreation activities, the library and more.
Doyon said that they’re paying COVID-19 expenses first with those funds, then watching the legislative session as many local government officials fear lawmakers will cut the entitlement share to cities and towns, which is a major revenue source.
Kinzler said that the city’s annual entitlement share from the state is typically $8.5 million, “so if something were to happen to that, it would be a substantial impact to general fund.”
For the current budget year, the city did not use the inflationary factor or permissive medical levy to increase taxes on property owners due to COVID-19.
Once COVID-19 expenses are paid and the legislative session is complete, Doyon said staff would look at what CARES Act funding is left and make recommendations to commissioners for eligible expenditures.