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The City of Williamsport presented a $28.6 million proposed 2023 zero-tax-increase budget during a City Council work session on Wednesday.
Mayor Derek Slaughter presented the proposed general fund budget to the council with Tracey Rash, of Government Finance Solutions of Harrisburg, the contracted finance adviser.
The proposed budget anticipates a 92% collection rate of property taxes or $21.1 million.
Adam Yoder, council president, opened the floor to Slaughter and Rash who gave an assessment of the proposed budget and offered assumptions they were going through. These are based on conservative estimates.
"We realize that this budget is being presented a little differently than it has in the past," Slaughter said.
The amounts presented are "accurate to the best of our ability given the antiquated accounting systems, lack of some reconciliation and audits for the past four years and time constraints," Slaughter said.
The effort this year, looking to next year, has been to tie in the capital projects budget, which historically has been separate, and integrate that budget into the general operation budget.
In that way, the administration is hoping to establish a sustainable plan for capital needs for the city moving forward.
This year, there is a capital projects budget that shows how it is to be funded.
"It's not a wish list, as in previous years," Slaughter said.
Instead, Slaughter and Rash went to each department, met with department heads, talked about capital needs, put a list together and formulated a plan. That plan is to fund the end of this year and to fund those capital purchases moving forward.
The order of the budget was changed then how it was presented in work sessions of the past. This was presented in an order suggested by the state Department of Community and Economic Development.
The budget books given to the council have several sections, the first being a summary of the general fund. Behind the summary page are details of each section. The budget book contains a history of the accounts to provide background.
The budget book then contains smaller funds, salaries and capital projects.
Information technology role in modern city
Rash noted the information technology budget, which has historically been a part of the general fund budget, has been moved into City Hall operating budget.
The reason is the department operates as an internal service. Information technology provides services to each of the departments in the city. For a fair presentation of each of those departments an allocation of those costs in the departments is needed.
For instance, if information technology buys a cyber security package, each department in the city benefits.
"We've moved IT from the general fund to the City Hall operating (budget) and allocated those costs to every department," Rash said.
Every department then bears its fair share of costs, she said.
Capital project transfers
Each department has a line item to transfer to capital projects.
That is a method meant to give a true picture of what each department has and what is needed in terms of equipment.
"We've said that each year you should be funding a portion of those capital assets," Rash said.
The purpose is to save for future purchases. It is considered to be a wise way to purchase when departments need to and have the savings in which to do it, she said.
For example, City Hall operating costs for the past two years have been spent out of available cash. What that means is these costs have been running through the City Hall operating fund and they have not been charged to the appropriate department nor have they been funded, Rash said.
Rent and utilities unreconciled
The River Valley Transit Authority has been unable to provide "viable" and "accurate information regarding rental properties and utility payments. Because of this incomplete information, the amounts for rent and utilities are what Rash described as "significant estimates," at this time.
"We've not received viable, accurate information from River Valley Transit Authority on what your rent or utilities are," she told the council, which coincides with what Slaughter alluded to when he said some accounts remain unreconciled.
One issue that was made clear in the proposed budget is the $2 million tax anticipation note has been removed from out of revenue and expenditure category
This is borrowing that is done by municipalities, including the city in the past, to meet the payroll and operating expenses until the first property taxes arrive in March.
Income and expenses highlighted
Under city revenue, the proposed budget increased by $1.2 million.
It looks on paper as though the city is budgeting taxes lower than the prior year.
In the past, however, the city budgeted a $2 million tax revenue anticipation note under taxes.
The proper accounting for such a note is not to put it through revenue and expenditures.
Tax revenue anticipation note is a short-term liability. In this proposed budget the note was removed from taxes and thus shows the decrease in the category.
Overall, the budget proposes $21.1 million in real estate tax collection.
Other income estimates include $835,000 in licenses fees; $74,500 fines; $91,000 interest; $509,000 department earnings; $1.3 million in state grants; $4 million federal grants and $621,500 other grants.
Some $2.06 million in American Rescue Plan funds are proposed to go into capital projects.
Slaughter said that would enable the actual funding of capital projects budget items.
The city was notified it received $25 million in American Rescue Plan Act funds. They can't be used toward debt but the city is putting a capital plan in place, and a beginning balance that has not been funded all along.
"The question becomes 'So, what do we need to do to get you in a . . . one-time place to be able to have the savings to purchase equipment when it is needed?'" Rash asked. That is where the rescue plan comes into the picture. The intention is for a portion of its use on future capital projects.
Meanwhile, overall salaries for union employees are as per contractual agreement and for all others a proposed 3% increase in wages.
About $1 million is proposed for debt funding relief and $960,000 in prior-year lost revenue. The debt service fund was reviewed with the current level of debt at $1.83 million.
Departments of Public Works and Recreation proposed budgets were reviewed. Councilwoman Bonnie Katz asked whether special events in recreation might be outsourced. Slaughter said he would be willing to explore that request.
Miscellaneous fund budgets were proposed.
Among these were capital project funds, particularly those focused on equipment purchases.
The administration estimated the useful lives for the equipment, how much money has been saved to date and provided charts for each year for the next five years and what they need to save to purchase the equipment.
Councilwoman Liz Miele asked and was given an answer that these were current estimates of equipment for the capital projects budget.
City Hall operating budget of $283,000 includes facilities operations of City Hall, new City Hall and information technology.
Council reviewed liquid fuels or money from the state specifically for street resurfacing.
A conservative Act 13 or natural gas impact fees item was budgeted at $250,000. The city has $1 million in its Act 13 fund available with $528,000 from the prior year.
Council holds a second budget work session at 7 p.m. Monday. That has public safety such as police, fire and codes departmental proposed budgets on the agenda. The first two departments have the largest budgets annually.
The council meets afterward at 7 p.m. Dec. 8. and 7 p.m. Dec. 15.