Marysville officials got their first look at the 2021 budget earlier this week.
“In spite of COVID-19, we are able to provide a balanced budget with no deficit spending,” said City Finance Director Brad Lutz.
Lutz presented the first copy of the 2021 budget at a special meeting of city council. He said that while the final budget will not look exactly like the proposal, it will likely look similar.
Emery said this first review step is important in “trying to get our minds wrapped around what we are seeing going into 2021.”
He said many of the projections and anticipated expenses for 2021 look a lot 2020.
“A lot of them are pretty flat,” Emery said. As a matter of fact, most of them, I think you are going to see coming in like that.”
Lutz said the budget does represent, “a pause in growth.”
“I think I have done my best to present a balanced budget, especially in the general fund,” Lutz said.
For the general fund, Lutz estimated 2021 revenue and 2021 disbursements both at $23.78-million.
He explained that, “in general, it is in your best interest not to estimate your revenue at the highest possible level you might come in at.”
He said it can create a problem if the city overestimates revenue.
Additionally, Lutz said hoes try, “not to be overly pessimistic unless I see a reason to be.”
He said he doesn’t see a reason to be pessimistic for 2021.
The finance director did reduce his income tax revenue estimate by about $500,000 from 2020 to 2021. He called the revenue estimates, especially in the time of COVID-19, “our best guesses.”
City officials said the budget does come with a caveat. The balanced budget does not include any increase in staffing or any street paving projects.
Emery said the city has a staffing plan that includes incrementally adding necessary staff. He said that if no staff is added this year, it would, “bump our plan back a year or two.”
The city manager said that after the first quarter of the year, city officials will have final numbers on 2020 revenue and expenses as well as a general idea of where the 2021 revenue is trending. He said at that point council may decide to add work force and paving projects.
Lutz said the city’s inability to perform paving is “not what we want to see.”
“But in order to get to a balanced budget, that’s where cuts are made,” Lutz said.
Council member Deborah Groat said a previous administration borrowed money to maintain the city’s paving program and it was “a dreadful disaster.”
Council talked about the idea that the state recommends enough money in reserve to operate for six months with no revenue, about $9 million for Marysville
Lutz noted that council has said it wants the city to have a minimum $6-million. He said that would allow the city to operate for about three months with no revenue. Lutz said he feels that amount is “reasonable.”
“That puts us in a good position, without us feeling like we are hoarding,” Lutz said.
Council member Alan Seymour added that, “without that three months, we would basically be living month to month.”
Lutz said he doesn’t mind deficit spending in some funds that have been strategically built up over time. He said that is the point of some funds, to set money aside in anticipation of bigger projects in the future.
“That’s why you built up that find,” Lutz said.
Lutz warned council members not to be too optimistic about a reduction in costs for 2020. He said that often a reduction in expenses is the result of a project that didn’t get done. He said either the funding was delayed and will be taken from another year, or the project will need deferred.
“More profit does not necessarily mean we are doing better,” Lutz said.
He did explain that while many line items are flat, staff will still have the resources to perform their duties and provide city services.
Groat said she appreciates Lutz’s approach to budgeting. She said she worries 2021 could be “huge for inflation.”
Emery encouraged council members to review the budget and meet individually with members of administration to discuss issues, questions or changes. He said the council will discuss the budget at an upcoming work session. The first reading of the 2021 budget is set for Oct. 26.
Administrators said that while this is a budget they would stand behind, in their experience, the final budget never looks identical to the first draft.
Council member J.R. Rausch said the budget process is one of the best things about Marysville’s form of government. He said that in years past, when Marysville had an elected mayor, the budget was more that person’s plan and not the plan of council.