Moments after voting 5-0 to adopt the city’s fiscal year 2024-25 budget on Friday, city councilors and Mayor Kirk Rivers were facing the possibility of the city starting the new fiscal year already in the red to the tune of nearly $350,000.
That realization set in after City Manager Montré Freeman asked council to approve a budget amendment to the 2023-24 budget, which expired on June 30.
The amendment sought to appropriate $296,000 in interest earned off investments and another $42,000 in late-fee collections to cover overspending — primarily on salaries and wages in seven city departments — in the city’s just concluded 2023-24 budget.
After a lengthy discussion that included councilors expressing frustration with Freeman, they voted 3-2 to approve his amendment request.
Voting for the amendment were 3rd Ward Councilors Kem Spence and Katherine Felton and 4th Ward Councilman Johnnie Walton. Casting the dissenting votes were 1st Ward Councilman Joe Peel and 4th Ward Councilor Ronnie Morris. First Ward Councilman Johnson Biggs and 2nd Ward Councilors Javis Gibbs and Rose Whitehurst did not attend Friday’s meeting.
The 2024-25 fiscal year began on Monday. In theory, because the city’s current budget was compiled using salary information that had not accounted for nearly $350,000 in overspending in the previous budget, the current year’s budget could already be that far in the red.
Freeman and city Finance Director Alicia Steward explained that the requested appropriation would not affect the city’s fund balance and that any monies not applied to over expenditures would go to fund balance.
“So, we’re offsetting any of the expenditures that the departments might be going over” in their budget, Steward said.
Steward said the amendment would ensure the city closed out its books for the 2023-24 year without a deficit.
Peel, however, pointed out that the amendment would only settle overspending in last year’s city budget. It would not address the impact of the overspending on the current year’s budget council had just voted to approve.
“That’s just one small part of it,” he said. “All this money is going to salaries and wages.”
“We’re overspending about $350,000 on this year (2023-24),” added Rivers, who was looking at a copy of the amendment.
The $296,000 in interest off investments will cover salary and wage overages in seven departments, including $100,000 for city fire services and another $39,000 for human resources.
“Why are we adding $39,000 to human resources?” River asked, pointing out that the HR department has a vacant salary position because it is operating without a director.
“You’re not $39,000 over,” said Freeman, explaining that the number was a projection to ensure all HR salaries remain within budget.
The $42,000 in late fee collections will cover any salary overages in the finance department.
Freeman’s amendment request included a written explanation for why he said it was necessary:
“Occasionally, budget amendments are needed after the initial budget is adopted by the City Council in June for the following fiscal year,” the request states. “These amendments are necessary for a variety of reasons to carry forward projects that were approved in the prior year but were not foreseen and previously budgeted; for increases in costs that were estimated in the budget at a lower amount and for increases in revenue that were estimated in the budget at a lower amount.”
Rivers referred to the list of overages included in the amendment before readdressing Freeman.
“So, in all the ones you have, you’ve signed off on this, so when I ask this question think about it before you answer,” Rivers said. “When we get our actual budget on our actual spending in July, which will have June 30 closed out, we will not have exceeded any of these amounts?”
“I don’t anticipate,” Freeman said.
“You’re going to be back here doing the same thing next year,” Peel cautioned.
“The same thing,” Felton echoed.
“Because you don’t have enough money in the 2024-25 budget,” Peel said.
Felton said she was frustrated by the timing of Freeman’s request. She noted that the first she learned about the salary overages was Friday, just moments after council approved the new fiscal year’s budget.
“My opinion is that we should have had this early enough so that we could go through it in detail and make sure that — and I’m just speaking for myself — that the numbers here — I mean, why are we getting this at the last minute like this?” she asked. “And this is the very last minute.”
Under state law, local governments must adopt a new budget for the following fiscal year by July 1. Prior to Friday’s meeting, City Council held a total of eight sessions to discuss the 2024-25 budget that began as early as April 8.
Peel said salary numbers remain the same throughout the year, give or take any wage increases.
Addressing Freeman, he said: “You should’ve known, two to three months ago whether you’re going to need more money or not, not just today. Nobody’s managing the shop and that’s the problem.”
Spence, council’s mayor pro tem, told Freeman that he and the finance department have to do a better job of monitoring the city’s budget.
“I’m saying this Mr. Manager because you’re ultimately responsible,” Spence said.
Morris said he was not happy with money in the city budget being moved around and applied to other uses “and (the city) not having what we need to do what we need at the end of the year.”
“This is unsatisfactory,” Morris told Freeman. “You could see it coming. I don’t understand why you couldn’t see it coming. You could see this coming a mile away.
“There’s no way we can keep giving away money and don’t have it,” Morris said.
Morris alluded to the numerous sessions City Council held to discuss the budget.
“We’ve been in here since April trying to get this stuff straight and then we bring this up today,” he said.
Walton suggested that council may have made the budget process more difficult that it needed to be.
“In this budget, the only thing we did was smart meters, no property taxes, a rider, repurposed positions, raises for employees,” Walton said. “That’s the only thing we did.”
Walton was referring to the $2.8 million included in the current budget for water smart meters for utility customers, no increases in property taxes and a rider of $4.14 on city utility bills to help pay “true-up” costs to the city’s electric power provider.
Walton said city councilors met several times to discuss the budget and “talked ourselves to death.”
“It wasn’t that hard as we made it,” he said. “But now at the 24th hour we want to make it look like it’s the staff’s fault. We talked ourselves to death.”
Walton asked Freeman how much in total interest earned off investments did the city have, to which Freeman replied, “a little over a million dollars.”
“Over a million dollars,” Walton said. “We’re in here crying about $296,000.”
Walton told fellow councilors to not blame the city staff for the over spending.
“If you want to blame anybody, put your finger out there and that thumb should be looking at you,” he said.
Following questions from Felton, Freeman said it could take up to 45 days for the city to see how much of the funds requested in the amendment would actually be applied toward overages in the previous year’s budget.
Freeman said he took responsibility for presenting the amendment request so late. He also said he would take measures to prevent it from happening again.
“I take full responsibility and we’ll change this process going forward,” he said.
Asked Monday if he had any comment on council’s criticisms of how the overspending and budget amendment were handled, Freeman said he did not.
Most Popular
Comments / 0