City conducts quarterly budget review; plans to use some CARES Act funds to replenish losses

City Commissioners reviewed the budget and the crime task force recommendations during their Feb. 1 work session.

Melissa Kinzler, finance director, and Kirsten Myre, deputy finance director, walked commissioners through their quarterly budget review.

Revenues were higher in fiscal year 2020, which ran from July 1, 2019 to June 30, 2020 since the federal CARES Act funds came in as well as the Calumet tax appeal settlement payment.

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It was also expected that the city would spend down the fund balance in fiscal year 2021, which was July 1, 2020 to June 30, 2021, they said, and that debt service was higher that budget year since the city did a lease for new public safety radios.

City Manager Greg Doyon said the city still has a high capacity for debt in the general fund, which is often needed to finance large projects.

The city does have debt for the Civic Center repair project, but that is accounted for in a separate fund.

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As they typically do, Kinzler and Myre detailed the city funds that need attention, most of which have been on the list for years before the pandemic, with the exception of the planning and community development fund.

Doyon said that as the city was extricating itself from the Electric City Power bankruptcy that required the city to pay a $3.25 million settlement, he began trying to limit general fund support to things the city didn’t absolutely need to fund or could be funded from other sources.

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Those cuts included fireworks, the Christmas tree, municipal band and a contribution to the Great Falls Development Authority.

He also pushed to limit general fund subsidies to other city funds, particularly enterprise funds that are designed to support themselves based on fees for services or other revenues.

But some of those funds have continued to struggle.

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One of those has been the golf fund, which is in the process of paying back the general fund roughly $1 million, Doyon said.

Since CourseCo took over management of the city’s two public golf courses on Feb. 1, 2019 for a three-year agreement.

Doyon said the golf fund has been turning around under the new management but it will still take a few years to recoup the losses.

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Myre said the deficit was lessening and that CourseCo pays the city twice a year under the management agreement.

In fiscal year 2021, CourseCo paid the city $330,000 and $264,000 so far in the current fiscal year, which began July 1, 2021.

The city is still responsible for capital improvements at the golf courses.

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The swimming pools fund also continues to struggle and Doyon said that pools are difficult to fund and for the new aquatic center it will require a community conversation about how much the community wants to pay in terms of fees, which will be discussed more in the budget process.

The recreation center fund was down as a result of losing a number of camps and activities during the pandemic.

The parking fund was also affected by the pandemic and made significant equipment purchases.

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The community and planning development fund is on the list for the first time, due to increased expenditures since the department was more fully staffed than it had been in years.

Kinzler said she’s not necessarily worried about that fund but they’ll talk about it during the budget process to possible adjust fees.

Doyon said some of that funding strain is because engineers were moved from public works to the planning department and they were tasked with funding those positions partly by fees.

Overall, Kinzler said, the city is in good financial shape.

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She reminded commissioners why the policy is to keep the fund balance at 22 percent and an example of what that’s important was the school district recertifying their mills this fall, which delayed tax bills so the city didn’t get its tax revenue until January, when in typically comes in December.

Without the fund balance and the CARES Act funds, the general fund would have gone negative until that tax revenue came in.

The city typically gets the bulk of its revenues from property taxes, which get to the city in December and June.

City staff are proposing to uses some of the CARES Act funds to replenish some of those city funds that took hits due to the pandemic.

“The likelihood of being able to recapture those funds or rehab it through a subsidy is just not there,” Doyon said.

Staff are proposing the following use of CARES Act funds to replenish lost revenue:

Kinzler said that many of those funds will continue to have struggles, but they are proposed for some CARES Act funds based on what staff estimates their lost revenue was due to COVID.

Doyon said staff is planning to bring that action to the commission for the Feb. 15 meeting.