Budget analysis shows reliance on utility revenue
Reprinted with permission from the Claremore Progress. This article originally appeared on Jun 21, 2016. Support local journalism with a subscription or a day pass for $1.99 :)
The Claremore City Council approved the city’s 2017 fiscal year budget during a special meeting on June 13.
Analysis of the budget shows that this year city government has a general fund budget of $14,714,320, $108,791 more than last year.
Of that, $9.4 million is revenue earned from utility income, which is transferred to support city government.
“If we did not have that transfer the City of Claremore couldn’t function,” City Manager Jim Thomas said at the special meeting. “In our form of government, we do not have the luxury of having ad valorem taxes. We have a subsidy that runs through the transfer of funds from Fund 40, the utility enterprise fund.”
The contribution from that enterprise fund has slowly increased since 2010 when it stood at $8.9 million. However, Mayor Bill Flanagan said over the last four years the transfer has stayed fairly consistent. The transfer decreased by approximately $100,000 from last year.
According to Thomas, sales tax revenue in Claremore has stayed flat for several years.
At the June 13 meeting, Thomas discussed economic development in surrounding communities including Catoosa and Inola, and said it detracts from potential sales tax revenue in Claremore.
The departments consuming the largest portions of the city budget are the Claremore Police Department and Claremore Fire Department.
“Out of every dollar that is brought into the general government, 57 cents is allocated to police and fire,” Flanagan said.
The city clerk, municipal court, custodial services and the cemetery fund are each approximately one percent of the total budget.
The city council, emergency funds, managerial department, information technology, senior citizens fund, library fund and finance department are each approximately two percent of the budget.
Human resources receives about three percent, or $420,462, of the city budget. This does not include the one-time expense for leap year wages, which occurs every 12 years.
Flanagan said the leap year expense is rare. Essentially, in 2017 the city will have 27 pay periods instead of 26.
This year human resources was allocated an extra $176,546 for one-time stipends paid to employees who are not members of a union, and did not receive a market salary adjustment.
“This decision was not easy, but I felt it was necessary to ensure our wages in certain salary markets remain competitive and reward our general non-union city employees with some compensation recognition,” Thomas said in a prepared message to the council.
Departments receiving the largest funding increase include city clerk, 55 percent, human resources 47 percent, and general government 426 percent. The city clerk budget increase is due to administrative assistant funding being transferred from the managerial department to the city clerk department.
The funding increased by $39,742, of which 86 percent is allocated to regular wages.
Human resources increased by 47 percent mostly to cover the one-time stipend.
The significant increase to general government is the result of changes to how the city handles workers’ compensation insurance, which before this year was allocated to different city departments, but is now accounted for in the general government department.
Workers’ compensation insurance will cost the city $624,957 in the 2017 fiscal year. The general government budget increased from $149,714 to $787,022.
The third largest general fund expense — after the fire and police departments — is “non-departmental,” which is eight percent, or $1,229,003, of the budget.
The non-departmental expense accounts for transfers to other city entities:
$15,000 is transferred to “Fund 24,” an emergency management fund to handle damage resulting from an event such as a flood or tornado. The contribution is matched by a state grant.
$227,538 is transferred to “Fund 27,” which supports the Claremore Expo Center, the RV Park and the Claremore Visitors Bureau.
$90,000 is transferred to cover costs related to the Rogers County Fair.
$195,000 is transferred to support the airport.
$450,000 is transferred to Claremore Industrial and Economic Development Authority for operations and salaries.
$193,000 covers expenses related to a tax agreement for the construction of the Claremore Conference Center.
$150,000 is a part of a long-term land purchase agreement.
This year the city anticipates a new $2,051,982 in revenue from increasing a customer charge on utility bills.
The revenue will be spent on infrastructure improvements, and will compensate for a rate increase by Grand River Dam Authority, which supplies power to the city, according to Thomas.