Larger Independence budget has signs of 'optimism'
After the city of Independence made it through the 2020-21 fiscal year without mass layoffs or furloughs for employees, and with some signs of pandemic recovery showing, City Manager Zach Walker calls his proposed budget for FY 2021-22 one of “cautious optimism.”
The proposed budget of $336.8 million, unveiled during Monday’s City Council meeting, is about $22.8 million (7 percent) greater than the previous year’s budget, which was reduced due to the pandemic. Fortunately, he added, the city did not have to tap into a $25 million contingency loan from utility reserve funds, nor use any of $1.5 million contingency dollars in the general fund.
The larger budget is due to increases in salary and benefits, retiree health insurance, capital improvements and operating expenses. Walker said city staff built the budget based on conservative revenue estimates, addressing the council’s strategic plan priorities, carefully drawing down on utility reserve funds and making careful use of federal stimulus dollars from the American Recovery Plan (ARP).
The general fund, which covers most city services outside of the utilities, is $78.36 million, nearly $4 million (5 percent) greater than the 2020-21 budget due to salary and benefit increases – both scheduled in union contracts and a 2 percent across-the-board increase for non-represented employees after last year’s wage freeze.
The ARP and the use tax for online sales, approved by voters two years ago, greatly helped this year’s general fund budget, Walker said. Stimulus dollars are being used to cover budget gaps and revenue losses, and use tax reached its waterfall right away this past year, allowing additional dollars for the general fund after covering the animal shelter and additional police officers as scheduled.
That waterfall meant additional $1 million for the general fund and various dedicated sales tax funds for 2021-22.
Among the ways Walker proposes to use ARP funds this year:
• $3.27 million to cover revenue losses in the general fund and tourism fund.
• $3.85 million for employee health care costs.
• $150,000 to help with start-up costs for the newly established health department, which will include animal services.
Several other possible uses of ARP funds were not listed in the initial proposed budget, subject to future guidance about how to use stimulus funds.
Without some steps over the next year, Walker warns, the city will face just as serious budget constraints, if not more, next year and beyond, as the ARP stimulus funds are finite.
Such steps could include:
• Changes to some legacy expenditures that grow at unsustainable rates, such as health benefits and vested leave payouts. The city made some cost-saving health care plan alterations two years ago, and should realize savings from that over time, but no notable health care changes are proposed in this 2021-22 budget.
• Attract and retain in-demand industries that provide local jobs.
• Ballot initiatives to grow revenues.
• Evaluate citizen demand for services and try to better align city resources toward those demands.
• Across-the-board workforce reductions.
Walker said some combination of those will be needed, though he certainly doesn’t recommend the last one, as cutting the workforce “would not be good.”
“I’m proud of the work we’ve done to control costs,” Walker said, “but I don’t think we can continue to cut our way to property. We need to focus on revenue growth.”
Mayor Eileen Weir noted that the budget does not include dollars still possibly available to the city from the state and federal levels.
“It’s not sustained money; we know that,” the mayor said, but they could cover some significant projects or programs, “and we will find ways to aggressively pursue it so we’re at the front of the line.”
A public hearing on the budget will take place at Monday’s council meeting, and Walker said staff is considering an online citizen survey, as well, in lieu of a town hall like in some prior years. The council will vote on the budget at the June 21 meeting.