T or C City Commission passes $44.7 million budget

The city commission passed a preliminary budget after holding their second budget session on May 15.

The budget covers the fiscal year starting July 1 and ending June 30, 2025.

Of the total $44.7 million in estimated expenditures, about 60 percent or $26.7 million will be spent on operations and $18 million on capital projects.

As in past years, very little discussion or explanation was devoted to capital projects, although it is 40 percent of the proposed budget.

Capital projects can be found on page 3 of the budget attached below, which are difficult to decode or match to what has been said by city staff. For example, Water and Wastewater Director Arnie Castaneda gave a brief rundown of several water and wastewater projects totaling $41.5 million at the May 8 regular meeting, but only $18 million in capital projects are in the budget.

More capital projects will no doubt be added through the year when grants and loans come through, just as they were added this fiscal year. But since no quarterly budget reports and only scattered  and incomplete capital projects reports are given, it is nearly impossible to know what the state of capital projects and their financial impact on the budget.

The $26.7 million operations budget includes:

– The general fund, $7.3 million or 16 percent of expenditures. “Government activities” is how government audit documents refer to departments that are not expected to make money but to provide community services and protection, which are mostly funded by taxes and some fees, as specified on page 4 of the budget. The top line on page 2 shows that taxes and fees will bring in about $5.4 million, leaving a nearly $2 million shortfall. It appears that about $2 million from the beginning cash balance will make up the difference. In past years the city has raided utility funds to pay for shortfalls in the general fund. That practice has not occurred in FY23 or FY24 and evidently not in the upcoming fiscal year. City manager, city clerk, finance, community development, community services, fire, police, animal shelter, library, parks and recreation, streets, facility management and a few other departments are mostly paid for out of the general fund.

– Special revenue funds, about $5 million or 11 percent of the budget, are mostly state allocations or funds with state or local rules or strings attached, prescribing their spending. These special revenue funds are listed on page 2 of the budget. For unknown reasons the municipal pool is under this rubric. In past years the general fund supported the pool at about $220,000 a year, but it will only receive $100,000 in the upcoming year. The city’s .25 police department gross receipts tax is also here. Unlike past years this fund will not be raided to support the general fund.

– Debt services fund, about $1.4 million or 3 percent of the budget, is the yearly nut the city has to pay on loans. Details about city debt are found on pages 82, 83 and 84 of the budget.

– Enterprise funds, about $13 million or 30 percent of the budget, are considered “business-like activities,” in government audit documents. These are departments that are supposed to be self-sufficient, limiting expenditures to fees they can command. They are listed on page 2 of the budget and include the water, wastewater, solid waste and electric departments, which fees have soared in the last five years to pay for failing infrastructure projects. The airport and golf course are also listed here, as should the swimming pool. The airport is not supporting itself and will get $250,000 from the general fund. The golf course is also not supporting itself and will get $255,000 from the general fund.

The city has steadily improved its management practices over the last three years. The essential and primary change has been the cessation of robbing utility funds and deferring maintenance. With failing water, wastewater and electric infrastructures, the city has had no choice but to put utility fees into capital projects and emergency repairs.

During the budget sessions there were several references to “iWorQ” a software program for project and department management. Nearly every department is adopting it.

It appears that the failure of the city to sell the electric department to Sierra Electric Cooperative taught the city a lot about management in general. The city commission admitted about three months ago they didn’t realize that having department heads who were “field guys” was insufficient and that they were “missing the administrative piece” until they saw how Sierra Electric managed their publicly-held company. At the last budget session Hechler said the city couldn’t get the price it wanted because the city had failed to keep records of assets’ age, condition, repairs and replacements.

Besides iWorQ, Mayor Rolf Hechler, City Manager Angela Gonzales and Assistant City Manager Traci Alvarez also revealed that yet another electric department study will be done, (five were done over three years for the sale evaluation and a rate study was done in 2023). This study will update a 2014 asset plan that wasn’t used or referred to or kept up by the department despite its nearly $150,000 cost. Besides laying out repairs, maintenance and capital projects in priority, the study will also determine what staffing is needed and their job descriptions.