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Tentative budget approved
THELMA GRIMES
News-Sun
In a unanimous vote, the Benson City Council has approved the $12,056,045, 2004-05 tentative budget, a nearly $2 million increase from last year.
With the approval, the council is now asking for public feedback. City Manager Boyd Kraemer informed the council that with the tentative budget approval on June 21, the budget can be decreased, but according to state law, cannot be increased. The first public hearing is scheduled for Monday, July 12.
City officials appear happy with the budget primarily created by City Clerk Karen Johnson and her staff. Kraemer called it a "transition year" budget, noting he is still learning the city's operations.
There are some areas of concern to council members, one being that to balance the budget, the city had to use $977,301 of reserve funds (or cash in the bank) to balance the upcoming fiscal year's budget. The city currently has a balance of just over $1.4 million in the bank.
Last year, the city only used $239,953 of reserved funds to balance the budget and the year before that zero.
Vice Mayor Jeannine Hamilton said there is no reason to panic. She said it's normal for cities to use reserve funding to help balance a budget.
"Budgeting it doesn't necessarily mean we are going to use the money," Hamilton said. "I think things are going to be tough this year. It's going to be tough to do everything that needs to be done because of funding."
Councilman Mark Fenn said he would like to avoid using reserve funds at all, but is confident in Johnson.
"(Johnson) has said we've never spent that money," Fenn said. "I am comfortable because I know Karen is tight fisted in guarding our reserve funds."
Why was more than $900,000 in reserved funding needed to balance the budget? A variety of reasons, according to city officials, the main one being $500,000 was budgeted in case the city settles a $1.7 million lawsuit levied by AmeriCon Constructors Inc. a year ago.
The lawsuit claims the city was in breach of contract and caused the company to incur substantial costs in the construction of the Benson Wastewater Treatment Facility.
City Attorney Ann Roberts said the money is budgeted as a contingency in case there is a settlement and to cover the city's legal fees. However, no settlement has been negotiated at this point, Roberts said, noting the lawsuit is still in the discovery process.
Johnson also said the city used about $175,000 in reserve funding to cover unexpected costs in 2003-04. One of the unexpected expenses throughout the year, Johnson said, was the increase in fuel.
Fenn said another added cost in the coming year is the cost to drill new wells. The city has budgeted more than $200,000 to drill new wells, which are needed to meet federally set standards regarding arsenic levels in the water system.
Four city wells are below federal standards of 10 parts per billion of arsenic. The city has until January 2006 to meet the new federal requirements, which had been at 50 parts per billion.
Another area of concern for City Council members is utilities in the coming year. City officials have warned rate increases in several departments are "probably" coming up.
"The utilities need to stand on their own," said Fenn. "The gas department has subsidized the other utilities for several years now and we can't continue to operate that way. We are going to have to increase rates or somehow cutback on costs."
Scott said the water department is one of his major concerns, noting that rate increases are probable.
According to the city's combined cash investment report on May 31, the water fund is currently running at a $360,100.85 deficit. With 92 percent of the 2003-04 fiscal year elapsed, the city has collected $449,035.64 in water revenues, just 62 percent of the $714,528 budgeted.
In the gas department, the city currently has just over $1.1 million in the bank and has collected 72 percent of the expected revenue this year. Of the $1,344,000 budgeted, the city collected $970,802.38 as of May 31.
The wastewater utility is also struggling with the city only collecting 41 percent of the projected revenue for the 2003-04 fiscal year. The city expected $790,196, but as of May 31, had collected $324,751.40.
For the wastewater utility to meet expectations, the city would've had to collect $465,442.60 between May 31 and June 30, which marks the expiration of the current fiscal year.
The City Council has already taken steps to make the sanitation department stand on its own. Council members unanimously approved rate increases over the next five years. Residents were paying $11 a month and the first increase was 56 cents.
With the new fiscal year starting tomorrow, residents will have to pay another increase, bringing total cost for garbage pickup to $12.56 per month.
Mayor Scott said he'd like all the utility departments to stand on their own financially by the 2005-06 fiscal year.
In other important aspects of this year's budget, Scott said he is pleased with the changes in insurance coverage.
Until now, the city has contracted with local insurance agent Jones Wilson for general liability insurance. However, in going out to bid for the coming fiscal year, the city found they could double their coverage for the same cost through the Arizona Multiple Risk Retention Pool.
In the coming year, Scott said the city is spending the same amount ($141,323), but will go from a $5 million to a $10 million policy.
"Basically, we are saving the city $35,000 a year," Scott said. "We are spending the same amount, but we are getting double the coverage."
The city is also set to spend the same amount on employee health insurance in 2004-05, Kraemer said. In the tentative budget, the council approved spending $343,000 for health insurance, like last year, but employees will incur a 15 percent increase.
Johnson said the city would continue paying the same amount and any added insurance costs would be passed on to employees. The city quit providing 100 percent health coverage last year.
However, following Kraemer's recommendation, the council did approve a three percent cost of living salary increase for all city employees in the coming year. The city spent $2.302 million in 2003-04 and is set to spend $2.5 million in the coming year.
Kraemer also received council approval to institute a merit wage program. Employees exceeding expectations should be rewarded, Kraemer said. The council budgeted $14,431 in the coming year.
"I think the budget is a document that shows the overall direction the city wants to take," Fenn said. "The budget shows the people where (the City Council's) priorities are because it shows where we are spending our dollars."
In the coming fiscal year, Fenn said he is happy the budget "is very realistic."
One aspect of being "realistic" in the tentative budget is capital improvement projects. In 2003-04, the council approved $453,500 in capital improvement projects, which included a birding trail, skate park, city improvements and equipment needs and City Hall remodeling.
Few of the projects were completed due to a lack of funding. In the tentative budget few improvement projects are listed specifically.
"I think this budget kind of puts a halt to all that kind of spending and says let's get caught up with everything else before moving on with new projects," Fenn said.
One aspect several council members expressed concern with is street and utility improvements. Councilman Ted Amox has said the city needs to fix a lot of "lingering" problems before moving on to new projects.
According to state law, Kraemer said the budget has to be approved and submitted by the first week of August. To meet that requirement, Kraemer said the City Council must approve the final budget on Monday, July 19.
However, before final approval, the council is required to receive public comments. The first public hearing will be held on July 12, at 6 p.m., the second is scheduled for July 19, during the regular City Council meeting, the same night the final budget is set to be approved.
News-Sun
In a unanimous vote, the Benson City Council has approved the $12,056,045, 2004-05 tentative budget, a nearly $2 million increase from last year.
With the approval, the council is now asking for public feedback. City Manager Boyd Kraemer informed the council that with the tentative budget approval on June 21, the budget can be decreased, but according to state law, cannot be increased. The first public hearing is scheduled for Monday, July 12.
City officials appear happy with the budget primarily created by City Clerk Karen Johnson and her staff. Kraemer called it a "transition year" budget, noting he is still learning the city's operations.
There are some areas of concern to council members, one being that to balance the budget, the city had to use $977,301 of reserve funds (or cash in the bank) to balance the upcoming fiscal year's budget. The city currently has a balance of just over $1.4 million in the bank.
Last year, the city only used $239,953 of reserved funds to balance the budget and the year before that zero.
Vice Mayor Jeannine Hamilton said there is no reason to panic. She said it's normal for cities to use reserve funding to help balance a budget.
"Budgeting it doesn't necessarily mean we are going to use the money," Hamilton said. "I think things are going to be tough this year. It's going to be tough to do everything that needs to be done because of funding."
Councilman Mark Fenn said he would like to avoid using reserve funds at all, but is confident in Johnson.
"(Johnson) has said we've never spent that money," Fenn said. "I am comfortable because I know Karen is tight fisted in guarding our reserve funds."
Why was more than $900,000 in reserved funding needed to balance the budget? A variety of reasons, according to city officials, the main one being $500,000 was budgeted in case the city settles a $1.7 million lawsuit levied by AmeriCon Constructors Inc. a year ago.
The lawsuit claims the city was in breach of contract and caused the company to incur substantial costs in the construction of the Benson Wastewater Treatment Facility.
City Attorney Ann Roberts said the money is budgeted as a contingency in case there is a settlement and to cover the city's legal fees. However, no settlement has been negotiated at this point, Roberts said, noting the lawsuit is still in the discovery process.
Johnson also said the city used about $175,000 in reserve funding to cover unexpected costs in 2003-04. One of the unexpected expenses throughout the year, Johnson said, was the increase in fuel.
Fenn said another added cost in the coming year is the cost to drill new wells. The city has budgeted more than $200,000 to drill new wells, which are needed to meet federally set standards regarding arsenic levels in the water system.
Four city wells are below federal standards of 10 parts per billion of arsenic. The city has until January 2006 to meet the new federal requirements, which had been at 50 parts per billion.
Another area of concern for City Council members is utilities in the coming year. City officials have warned rate increases in several departments are "probably" coming up.
"The utilities need to stand on their own," said Fenn. "The gas department has subsidized the other utilities for several years now and we can't continue to operate that way. We are going to have to increase rates or somehow cutback on costs."
Scott said the water department is one of his major concerns, noting that rate increases are probable.
According to the city's combined cash investment report on May 31, the water fund is currently running at a $360,100.85 deficit. With 92 percent of the 2003-04 fiscal year elapsed, the city has collected $449,035.64 in water revenues, just 62 percent of the $714,528 budgeted.
In the gas department, the city currently has just over $1.1 million in the bank and has collected 72 percent of the expected revenue this year. Of the $1,344,000 budgeted, the city collected $970,802.38 as of May 31.
The wastewater utility is also struggling with the city only collecting 41 percent of the projected revenue for the 2003-04 fiscal year. The city expected $790,196, but as of May 31, had collected $324,751.40.
For the wastewater utility to meet expectations, the city would've had to collect $465,442.60 between May 31 and June 30, which marks the expiration of the current fiscal year.
The City Council has already taken steps to make the sanitation department stand on its own. Council members unanimously approved rate increases over the next five years. Residents were paying $11 a month and the first increase was 56 cents.
With the new fiscal year starting tomorrow, residents will have to pay another increase, bringing total cost for garbage pickup to $12.56 per month.
Mayor Scott said he'd like all the utility departments to stand on their own financially by the 2005-06 fiscal year.
In other important aspects of this year's budget, Scott said he is pleased with the changes in insurance coverage.
Until now, the city has contracted with local insurance agent Jones Wilson for general liability insurance. However, in going out to bid for the coming fiscal year, the city found they could double their coverage for the same cost through the Arizona Multiple Risk Retention Pool.
In the coming year, Scott said the city is spending the same amount ($141,323), but will go from a $5 million to a $10 million policy.
"Basically, we are saving the city $35,000 a year," Scott said. "We are spending the same amount, but we are getting double the coverage."
The city is also set to spend the same amount on employee health insurance in 2004-05, Kraemer said. In the tentative budget, the council approved spending $343,000 for health insurance, like last year, but employees will incur a 15 percent increase.
Johnson said the city would continue paying the same amount and any added insurance costs would be passed on to employees. The city quit providing 100 percent health coverage last year.
However, following Kraemer's recommendation, the council did approve a three percent cost of living salary increase for all city employees in the coming year. The city spent $2.302 million in 2003-04 and is set to spend $2.5 million in the coming year.
Kraemer also received council approval to institute a merit wage program. Employees exceeding expectations should be rewarded, Kraemer said. The council budgeted $14,431 in the coming year.
"I think the budget is a document that shows the overall direction the city wants to take," Fenn said. "The budget shows the people where (the City Council's) priorities are because it shows where we are spending our dollars."
In the coming fiscal year, Fenn said he is happy the budget "is very realistic."
One aspect of being "realistic" in the tentative budget is capital improvement projects. In 2003-04, the council approved $453,500 in capital improvement projects, which included a birding trail, skate park, city improvements and equipment needs and City Hall remodeling.
Few of the projects were completed due to a lack of funding. In the tentative budget few improvement projects are listed specifically.
"I think this budget kind of puts a halt to all that kind of spending and says let's get caught up with everything else before moving on with new projects," Fenn said.
One aspect several council members expressed concern with is street and utility improvements. Councilman Ted Amox has said the city needs to fix a lot of "lingering" problems before moving on to new projects.
According to state law, Kraemer said the budget has to be approved and submitted by the first week of August. To meet that requirement, Kraemer said the City Council must approve the final budget on Monday, July 19.
However, before final approval, the council is required to receive public comments. The first public hearing will be held on July 12, at 6 p.m., the second is scheduled for July 19, during the regular City Council meeting, the same night the final budget is set to be approved.
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