Council members question items during budget workship

The Kimball city council reviewed a potential budget during a budget workshop meeting held Aug. 26. Board members voiced concerns and considered changes for each department.

“My (concern) is going to be somewhat general because it pops up in several places,” board member James Schnell said. “The landfill expense (line item) bad debt shows 100 percent. My question is throughout this we show that we have bad debt, but are we just writing them off, zero them out? We don’t send anything to collections?”

The electric and the power plant show collections activities as bad debt recovered, according to City Administrator Daniel Ortiz.

“Typically when we do send delinquent accounts to collection that is typically where it comes from,” Oritz said. “I think in the past the landfill kind of got rolled into the electric department in terms of when they come in.”

A second question that Schnell asked was about amounts that had been previously budgeted, not used, and then re-budgeted at that same amount, instead of being decreased to an amount closer to what is actually used.

Specifically, the amount that caught Schnell’s attention was the group insurance rates, which were budgeted at a much higher amount in most cases than what was needed.

“I essentially, going through most departments, I looked at the transactions listing on each accounts to get a better understanding of where those accounts are coming from, so that number is really just reflective of what we have here to date,” Ortiz said.

The city administrator continued that in most cases it is better to have more budgeted for insurance.

“So, on the group insurance, where we had budgeted $42,700 in the budget, we have only gone through $19,500 but we propose $49,000?” Schnell asked.

Ortiz said that it seemed better to keep a little excess in the budget for unforeseen concerns throughout the year.

“I didn’t want to reduce it because I wasn’t sure what was the driving force,” Ortiz stated.

Schnell continued that departments could use the excess money from one line item for other needs that arise unexpectedly.

“When we have a good calendar year on the insurance premiums and stuff, it would be my suggestion to that board, there is your nest, start moving it over,” Schnell said. “The numbers we were just talking about where we were only going to write $25,000 and we ended up writing dang near $50,000, that would be nice if other things wouldn’t jump up and bite us.”

Ortiz said the upcoming rate study, which is more in depth than any done before this time, has taken more time than expected due to the amount of information requested.

“I anticipate, hopefully, that the rate study can be completed by the end of the year, but it has been slower than anticipated,” Ortiz said.

Ortiz said that as time permits, he would like to make the budget documents more reader-friendly so any resident could easily see, for instance, the break out between the electric and power plant departments.

Street lighting, holiday lighting and electric distribution system repairs have historically been lumped into one category, according to Ortiz.

“I really wanted to go through and really do a lot of break out some more stuff to make it much more reader friendly,” Ortiz said. “You have line items (on the budget) that quite frankly from just an average readers perspective, you wouldn’t know that miscellaneous income included the credit card processing fees.”

Office expense and office supplies for the electric department caught council member James Shields’ eye when asking questions regarding the department expenses.

Ortiz replied that in addition to envelopes, pens and other office supplies, those lines fund new computer software and hardware as well as printer and copier fees and repairs.

“Last year was $20,000 and you (have used) about 45 percent now,” Shields said. “So do you think you can trim that back for the proposed budget?”

Ortiz said that the higher amount was carried over from previous years, when a new server was purchased.

“We can trim that back. Upgraded some of the computers that were still running on Windows XP,” Ortiz said. “The only thing we will likely do is upgrade Jean’s computer. She runs all of billing and connects equipment to it.”

Ortiz offered to reduce that line item from $20,000 to $15,000, to which Schnell asked Ortiz how comfortable he was with the cut proposed for testing, which went from $30,000 to $15,000.

WATER

The water department has had a long list of capital improvements that continue to be pushed to the back burner due to a lack of funding, according to water superintendent Dave Ford.

Despite that fact, the department is already over-budget.

In addition to the old water tower, another such expense will be replacing several non-functional fire hydrants this fiscal year.

“We have seven fire hydrants, the good majority of them on first street that are not functional,” Ortiz said. “We are going to replace those at a cost of about $45,000. That is a sizable expense, but one that we can’t keep prolonging.”

According to Ford, these particular hydrants have been on budgets for a number of years.

“It just has not been done because there is no money,” Ford said. “There are other things that need to be repaired in the water system that we just keep putting off, but like (Schnell) said, it’s not going to repair itself.”

The process to address those concerns will be a long one, but it is something Ortiz has considered.

“In talking with Baker and Associates and on the rate study, we talked about trying to develop a capital infrastructure replacement or improvement funding account specifically dedicated for that, to start putting money away for those items,” Ortiz stated.

Council member Christy Warner questioned if that was even a possibility. Ortiz said that starting such an account would be doable, but growing it to a point where the funds are usable is another matter.

“Implementing that, and having that will certainly provide some more assurance when we start looking at these projects financing wise and for bonding purposes,” Ortiz said. “So it would be a solely dedicated fund for capital and infrastructure repairs and improvements.”

Schnell questioned whether that was the original idea behind the 4 percent occupation tax on water and electric rates, which currently goes into the general fund and is then divvied up between several departments. This includes the library and the fitness center as well as the fire department.

“On the occupation tax, my understanding is that you can repurpose the amount, but you can’t change the amount without going to a vote of the people,” Ortiz said.

The proposed budget for the coming fiscal year has revenue listed at $385,740 with proposed expenditures totaling $719,156.02. This is a planned loss of $333,416.02.

The Waste Water Treatment Plant is over budget by more than $86,000 due in large part to repairs, maintenance and operating supplies, according to the WWTP worksheet.

The proposed budget for the coming fiscal year shows a planned decrease in income of $720 as well as a planned increase in expenses of $112,807.98 for a planned loss of $206,320.41.

LANDFILL

Closing the current cell is already paid for with a money the Nebraska Department of Environmental Quality mandates be kept separate for that purpose. It should not then be counted as either income or expense and essentially should be a “wash” as far as the budget is concerned.

Regardless, the $42,000 shortfall of landfill income Ortiz mentioned during a Board of Public Works meeting was not seen in the budget worksheet presented Wednesday evening during the budget workshop.

Instead, the landfill worksheet shows that, at this point – 85 percent into the fiscal year, the landfill has reached more than 95 percent of its expected income.

According to the same worksheet, the city expected $4,000 in miscellaneous income, but received more than $21,000. This was due in part to a scrap tire grant of $18,551.

Regardless of the increased income amount, the landfill exceeded the budget set for the current fiscal year, by more than $34,000 to date, due mostly to an increase of equipment lease from the budgeted $1,000 to $13,000.

The proposed budget for the coming fiscal year for the landfill totals $934,947.34, including $525,000 for cell closure, with expected expenditures at $1,220,099.92 – a planned loss of $285,152.58.

Additionally, the local trash department is currently under budget, with more than $3,000 to spare, and the proposed budget includes a planned loss of $211,577.89.

“The deficits in some of the departments is reflective of actual cash flow projected in the individual departments. They do not take into account accumulated cash such as closure/post closure funds set aside from the landfill,” Ortiz stated in an email.