(STILLWATER, OKLAHOMA / Sept. 13, 2018) – In October 2016 (FY17), as a result of declining sales tax collections, the City of Stillwater announced that it was taking a hard look at the city’s budget. It introduced zero-based budgeting, reduced the general budget’s reliance on transfers from the Stillwater Utilities Authority (SUA) and scrutinized travel expenses, capital projects and frozen positions, which took the number of positions from about 600 employees to, as of today, 522.
“At the time, we were really trying to stop the slow bleed of dwindling sales tax revenue,” Deputy City Manager/CFO Melissa Reames said.
To determine if staff actions had any long-term effects on the City’s budget, City Manager Norman McNickle initiated a two-month long budget examination. “I wanted to know if their research would reveal trends or data that aren’t shown in our annual audit, and I’m happy to say the results were somewhat unexpected—positive—but unexpected,” he said.
First, staff examined accounts in the general fund and in the SUA that were earmarked for infrastructure projects that were paid for with savings that accrued by the actions listed above—leaving positive balances.
Next, staff looked at the current cash balances, the rate stabilization fund, and reserve funds that were established from guidelines set years ago and concluded that there may be too much funding being held in reserve.
During its research, staff have identified available funding that may exceed $10 million.
“We knew our prudent actions in 2016 were necessary, but we did not expect to see such savings,” City Manager Norman McNickle said.
He explained that City Council could release and/or transfer some or all of the savings to address current critical needs, thus reducing the amount of a future general obligation bond. Projects identified for a possible bond include building a new animal welfare building, moving Fire Station 2, upgrading the stormwater system, and repairing streets.
“However, even $10 million is not sufficient funding to complete all of the needed projects,” McNickle said. “We know we need to make a significant investment in our streets.”
The SUA transfer and expenditure of the funds will be discussed at the Monday, Sept. 17 Stillwater City Council meeting. A special meeting will be scheduled to provide a thorough explanation of the financial research staff have completed.
“In the past two years, we have made significant changes in our overall budgeting philosophy,” McNickle said. “Not only were we able to stabilize the budget, but we became a city government that was leaner and more efficient than before.”
He added that as a result of the examination staff will look at updating internal financial policies (including what is a proper cash reserve for the City in the current financial climate) and recommend new utility rate studies.
Another wild card concerning the City’s budget is the collection of online sales tax following a U.S. Supreme Court decision earlier this year. Reames is taking a wait-and-see approach on how much revenue that will bring to the City’s budget. “We expect to see an uptick in revenue, but we are not sure how large it will be,” she said.
McNickle said, “Instead of facing continual erosion of resources to serve the citizens, we’ve enjoyed having good news this time.”
While the FY19 budget began in July, staff are already at work on the FY20 budget. For more information about the City’s budget, financial records, sales tax collection and the Stillwater Strategic Plan, visit the City’s Financial Center online at http://stillwater.org/budget.
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