“We have a gap between revenue and expenses in the wrong direction,” said Kim Kleinow, finance director.
Revenue projection are based on a yearly:
2 percent increases in residential property taxes, which is capped by state law;
2 percent increase in investment income;
1 percent annual increase in issuing licenses and permits;
no increase in commercial property values, state revenue sharing or personal property tax on properties valued less than $40,000; and
1.3 percent decline in state motor fuel tax receipts.
The percentage investment income increase is deceptive.
Actual, dollar-for-dollar returns are expected to decline from $70,668 next year to nothing in fiscal year 2017-2018.
“We’re expecting investment income revenue to decrease because, as we use fund balance, we won’t have as much money to earn interest on,” Kleinow said.
Regarding expenses, Kleinow termed the city pension contribution “really bad news. That payment for next year ($289,120) is going up approximately $125,000 over last his year.”
The figure hits $428,124 in 2017.
Other annual expense outlooks are:
healthcare costs increase 3.5 percent,
non-salary, non-benefits go up 2 percent,
no wage increases and
some $98,000 is due each year as accrued benefit payouts to retirees.
“We have 14 employees eligible to retire over the next five years,” Kleinow said. “We have to plan for those payouts.”
“Because of actions taken over the last couple of years, knowing that we’re going to be under severe financial stress, we’ve been able to push out the time when our cash flow is zero, for a couple more years,” Dame said.
Although property taxes seem to be rebounding, downward momentum remains.
“If we don’t make significant changes by the fifth year, we won’t have any cash flow,” Dame said. “We’ll be spending what we saved over the next five years. In the fifth year, there won’t be any money left.”