(Jan. 16, 2015) The city’s latest budget reconciliation for the current fiscal cycle anticipates a considerable year-end surplus, but the City Council held off this week on formally dedicating any funding until the rest of the fiscal year shakes out.
As usual, the bulk of changes on the budget amendment consist of recording added income, and subsequent expenditures, from mid-year project grants.
Additionally, many purchase orders that arrived too late for the last fiscal year have their dedicated funding, and an equal expense, carried over to the current year.
The current 2014-2015 fiscal year ends June 30, with FY16 beginning July 1, 2015.
The only substantive changes to the FY15 budget were reductions in the anticipated revenues from parking fees and fines, as well as EMS billing.
Given the under-performance of these income streams so far, city Budget Manager Jennie Knapp recommended reducing the budget line items by $55,000 for parking fees, $50,000 for parking fines, and $200,000 for ambulance billing.
“We take the opportunity in the first budget amendment to make any corrections that it looks like we’re going to need,” Knapp said.
Billing for EMS is frequently unpredictable because of the large number of Medicare claims involved.
“When I spoke with Chuck [Deputy Fire Chief Barton] and Roger [Asst. Finance Administrator Baskerville], they felt that this was Medicare changing their rules all the time about what they will fund,” Knapp said.
“We can bill whatever we want, but Medicare will only pay a certain amount.”
Council Secretary Mary Knight said she recently had two constituents call her about bills for ambulance and life-support service. Out of each $600 bill, Medicare would only cover $300.
“One set up a payment plan, and the other just refused to pay,” Knight said.
Finance Administrator Martha Bennett also reported that last year, for the first time, the city began using an outside contractor for EMS billing. That contractor was also given the city’s uncollected bills from previous years, which may have boosted last year’s revenue.
“They were able to collect a large number of back bills when we went with this company,” Bennett said. “That can’t happen every year … I think I overestimated how much we’d get based on that bump we got the first year they took over the old accounts.”
Changes in parking were less clear. A reduction in meter revenue may suggest people are parking illegally, but if that were the case, fines would be up, not down.
“I think we need to find out if we’re issuing less [parking tickets], or are we issuing them and not able to collect?” Councilman Wayne Hartman said.
Fortunately for city finances, the windfall savings of roughly $350,000 in retiree healthcare costs will be able to close the revenue gap. The savings is the result of the city’s amortization of its retiree health trust fund coming in much lower than estimated, because of a variety of measures taken over the past four years to reduce future healthcare costs.
Knapp also broached the topic of the roughly $1.5 million available from a similar reduction in required pension funding. Instead of continuing to climb, the city’s pension fund payments dipped this year because of improving market conditions and the completion of a five-year loss allocation following the 2008-2009 market crash.
While the council voted to allocate $90,000 of this surplus to cover a gap in the vehicle trust fund for the purchase of an ambulance, it delayed allocating to two other funds Knapp had brought forward: street paving and canal dredging.
Both projects have been difficult for the city to fund, and Knapp recommended setting aside $650,000 for next year’s street paving, and another $500,000 for dredging.
“Not knowing what will happen, what is the harm in waiting and seeing where we close out the year?” Hartman asked.
The surplus funds could simply remain in the city’s account balance until needed. However, it is typically the preference of city staff to allocate surplus funds to capital projects, so future work can be anticipated as early as possible.
If not allocated by June 30, the surplus funds would simply roll over into the FY16 budget, where the city may be seeing an increase in personnel costs due to ongoing contract negotiations with the Fraternal Order of Police.