Spring Hill’s budget appears healthier than it did last spring, city finance director Melanie Landis told the city council on Nov. 18.
Each quarter, she provides the council with a year-to-date budget update. At the end of the third quarter, she said, the city is on track to finish the year with more money in the bank than originally projected.
Last May, Landis told council members they would need to pare down expenditures before the end of the year to avoid shortfalls of more than $130,000. During a May 5 meeting, she presented a bleak budget picture for the remainder of 2010. However, the two funds she worried would end in the red in May – the general fund and the debt service fund — she now projects will finish the year with money in them.
“To me, the two that were projected to be in the negative, are projected to be in the black, and that makes me very happy,” she said.
Following that May meeting, council members with the help of city staff, created a plan of cuts that totaled more than $90,000.
Although the city will finish the year with money in the accounts, she cautioned council members that there is still work to be done to alleviate shortfalls in the future and pay back transfers that allowed the city to survive in 2010.
For example, the sewer fund will finish the year with $267,325, according to Landis’ projections.
“That doesn’t mean we have extra money,” she said.
In 2010, the city did not make a full loan payment for sewer improvements to the Kansas Department of Health and Environment. Next year, the city will need to make a full loan payment.
“The goal is to get (the sewer fund) in a healthy position,” she said. “Right now it’s functioning, but it’s not functioning well.”
The sewer fund also borrowed money from the water fund to make it through the year. Council members also instituted a $9 per month sewer service fee and increased sewer rates by nearly 25 percent.
Currently, the sewer fund owes $247,750 for 2008 debt service payments on the south sanitary sewer project. It also owes the water fund more than $1.3 million.
“One of the things that got us in this position is we weren’t increasing our rates incrementally,” she said.
Landis said in next year’s budget, city officials will need to find between $200,000 and $300,000 in additional funds to cover annual deficits in the fund. They’ll also need to create a plan to repay the water fund and to build a healthy reserve.
She said right now there is no money set aside for emergencies. A breakdown would require some sort of financing or loan.
“If something does break down and it’s major, we will have to be scrambling,” she said.
In the water fund, Landis predicts the city will finish the year with $180,000 on hand. However, the water fund debt was subsidized by the city’s general fund by $26,000.
The city also has more than $1.7 million in upcoming projects that need funding. Projects include a new water tower and a raw water line.
“We need a good plan so we can accomplish these,” she told council members.
At the end of the third quarter, all funds should typically have spent about 75 percent of the total budget projection.
With the exception of the aquatic center expenditures, all departments and funds are beneath the 75 percent mark.
She said the low numbers are a testament to how hard city employees have worked to save money.
“They’re saving everywhere they can,” she said. “It really does make a difference.”
In other business, the council:
• Heard a presentation on the Kansas PRIDE program.
• Approved a new sign directing visitors to Spring Hill’s historic downtown.
• Heard a presentation from the city’s auditor. The city earned an unqualified opinion.
• Heard a public safety update from Spring Hill Police Chief Mitch Hofmann.