The City is going thru a period of time that is not unique to Galena. As we approach the final quarter of our year (wow, how time flies), we are near the end of not only the year, but near the end of our budget. While we have been sounding the warning bells to tighten spending, the hard reality is that it cost money to operate the City. Our department heads have done a good job to stretch our dollars, but I think it is important that we understand where we stand budget wise in Galena. The general administration is paid for by the property taxes collected. This includes a number of line items including the City Hall, Police, and Fire departments. Water, sewer,landfill, and trash are our enterprise funds that are not tax based. About 1/3 of our property tax bill goes to the City, with the remaining 2/3 going to the operation of our schools, county government, and the state. Take your property tax bill, divide it by 3, and that is roughly the number we operate the entire City on. We had a rather difficult meeting with the auditor this week. The good news is all money is accounted for, but during the meeting, we were presented with the hard fact that we were pretty much assured a difficult end to our physical year. I will do my best to explain. First, we collected less tax money this year than we did in 2007! Thats right, even though the cost of everything is much higher this year than 7 years ago, we collected less property tax that funds the general fund. How could that be? Your governing board has consistently embraced a very conservative approach to tax and spend policies. The real cost of operating the City has been held artificially low by transferring money from our enterprise funds to the General fund. Our approach to keeping a lid on higher property taxes has been to develop alternate funding sources, and we have been very blessed to this point. In the last 3 to 4 years, the Council has transferred nearly 1.7 million dollars, primarily from the operation of our City owned C&D landfill to the general fund. That is how we have covered annual shortfalls in operating cost, as well as the investments on Main Street, the parks, our new storm sirens, and many other projects. The bottom line, the auditor advised us that he saw no way to end the year with anything less than a 260,000 dollar shortfall in the general fund. Yikes! We cannot do that. In the past, we would simply transfer $260,000.00 from one of our enterprise funds, and problem solved. Your governing board was well aware that the big influx of money from the C&D landfill was temporary. Our next projected revenue stream in the pipeline is the Hospital. It took nearly a year to work out the details on the operation, over a year to build, and two years to break even before we could see anything at all. That leaves at least a 3 year funding gap. No cash there yet! The council not only held the line, but actually reduced property taxes while operating cost continued to climb. This is our City. When the City received any cash windfalls, it was either reinvested back in our City thru improvements mentioned above, or given back to the residents via reduced mill levy on our property taxes. Bottom line, no more funds to transfer to the general fund. So is there a solution? The answer is yes, but I will tell you what we have done to this point. All temporary summer help, gone. We do that every year about this time anyway. We also laid off a couple of full time people that we simply could not afford to keep. I really hate this, but unlike the federal government, we cannot print money. We simply cannot spend money that we do not have. Rumors of the county collecting big money from the City are bogus. Talk of the City being in this spot because we had a huge tax bill, ridiculous. The good news is, I am confident we will end the year in the black. The bad news is, next year the General fund will have to be pretty much tax funded, as it is evident we will have to grind thru a temporary funding gap I described above. This is a long letter, but City finances can be difficult to understand and accurate representations cannot be made with short sound bites. In my next letter, I will try to explain in greater detail all the steps we will take to not only survive, but come out even stronger! ·
Posted on: Thu, 18 Sep 2014 11:47:19 +0000
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