“Obviously, it was a great year,” Marysville Finance Director Brad Lutz told the city finance committee at a recent meeting.
Lutz took time at the meeting to detail the city’s revenue and expenses for 2021.
In 2021, the city general fund had revenue of $28.7 million, up from $26.1 million in 2020 and $23.9 million in 2019. That increase includes a 10.7% increase in income tax and a 3.8% increase in property tax collection during 2021.
Lutz said the income tax increase was “primarily due to an increase in withholdings from the top ten withholders in the city and significantly increased net profit receipts compared to a year ago.”
He also commented it is “great to see” the increase in other taxes because “the biggest portion of these are lodging taxes.”
Local Government Funds provided by the state came in higher than the city anticipated but almost equal to 2020 revenue.
“The percentage received from the state is based on a formula which is applied to the State’s tax collections,” Lutz said. “These receipts indicate that the state is seeing the same increase in tax revenues that we are seeing locally.”
Lutz said expenses were higher than 2020, but “about where we expected.”
“As it stands right now, revenue was higher, expenses were higher,” Lutz said.
Lutz said it appears that for 2021 the city will have about $600,000 more in revenue than expenses, though the number could be higher because there are encumbrances totaling about $500,000, some of which may not actually get spent.
“What is your comfort level making decisions on that?” Council and finance committee member Henk Berbee asked.
He said that historically, when the city has revenue above projection, it is split evenly between paving projects, debt reduction and capital improvements.
Lutz recommended waiting until the city has numbers from the first quarter of the year before making any decisions. He said that would allow the city to know exactly how much carryover it has, plus it would allow him to be able to compare the first three months of 2022 to the same months in 2021 and, even more, 2019.
“Then, I would feel more comfortable coming to council,” Lutz said.
He said he still believes 2020 was such an outlier that officials should “throw out” those numbers.
“We have two years of uncertain trends,” Lutz said. “We need data, period.”
He said the city needs to figure out whether the increased revenue is a blip, possibly related to COVID or other singular events, or if the increased revenue is “the new normal.”
Lutz said there is another trend the city needs to monitor. He said the city has multiple contracts that are seeing costs that are “significantly higher.”
He said there has not been anything that has “blown me out of the water, but it is concerning.”
He said a truck costs about $10,000 more this year than at the same time last year.
“These are the types of things we need to think about moving forward,” Lutz said.
Seymour noted that the money allocated for street paving in 2022 may not be enough to pave as much as officials had planned for.
Lutz said that April will get the city into “bidding season.” He said once the city starts receiving bids for projects, “that will tell us a lot about inflation.”
He noted that it is difficult to project some of the increases.
Berbee said he appreciates Lutz’s approach.
“We don’t know until the end of the first quarter,” Berbee said. “Anything before that wouldn’t be a good decision until we know more.”
Seymour said the philosophy is “being conservative until we know more facts.”