By Emily Jarrett email@example.com
December 26, 2013
With just three months left in the fiscal year, city officials have started looking at next year’s budget and the current general revenue balance.
To assist the city in staying fiscally responsible, the Sedalia City Council recently approved a new ordinance aimed at keeping a certain minimum and maximum in its general fund. City Administrator Gary Edwards said while this has generally always been the case, the approval of the ordinance is the first time the city has had a formal, written policy.
“Most cities have something similar, we just didn’t have anything formal that addressed minimum and maximum requirements,” he said.
The ordinance states the city’s operating budget fund balance must not be below 25 percent or above 50 percent; currently that would indicate a fund balance of not less than $2 million and not more than $9 million, approximately.
“You don’t want less than 25 percent, obviously, because that means you can’t pay the bills but you also don’t want more than 50 percent because that indicates you’re not spending enough on services,” he said. “If we are over that 50 percent there’s a policy in place to start a spend-down, which would pay for one-time expenses such as a capital project. It wouldn’t go for something ongoing, such as personnel, because you don’t know what the economy will be like the next year.”
Edwards said around 2007 the city had a minimum fund balance of 10 percent, but “with the economy the way it has been, that needed to be increased. It’s common for cities to have a minimum of 20 percent but we wanted to put ours at 25, just to be cautious.”
Looking ahead to budget talks, Edwards said city revenue appears to be “stronger than ever.” Last year’s sales tax revenue was unusually low and the year prior was unusually high, but compared to several previous years, revenue is steady, he added.
“The majority of months this year have been up comparatively,” Edwards said. “It’s something we’ll continue to keep an eye on as the majority of our revenue is through sales tax, but it appears we’re in better shape this year than last.”
Edwards, city department heads and the council are scheduled to meet Jan. 11 for a goal-setting budget session and will continue to discuss city finances and next year’s expenditures during the next few months. The city’s fiscal year begins April 1.