Council mulls 2025 fiscal year budget

At a special meeting of the City Council on March 31,ith councilmember Matt Fox absent, the other four members of the council heard an overview of expected revenue and expenses for the 2025 fiscal year, which starts on July 1.

Before any discussion of a city budget can take place, it is important for observers to understand that a municipal budget does not work like a personal or household budget. To wit: If a person or business budgets for a certain amount of revenue and expenses and ends up with money left over, they can spend it. A city can’t do that. If spending has not been previously budgeted, the city can’t spend it no matter how much is in the pot. So, city budgets typically include “projected” spending that may never happen.

“I think an important distinction to understand is the budget vs. actual financial activity. The budget builds the plan and capacity for spending, it is the plan and road map for the year. The actual transactions are what truly impact the fund balance at the end of the year,” said Finance Director Cynthia Sneed.

As City Manager Taylour Tedder put in an an email, “Boulder City is a pay-as-you-go community, meaning we operate on a cash basis for most expenditures instead of issuing any debt. At the end of each year, funds that come in over budgeted revenues in addition to savings from coming in under budget on expenditures remain in the fund balance for future use.

Several of the items you see in the FY25 budget appearing as a deficit are transfers from the general fund balance into special funds, for contingency so we can respond to unforeseen disasters that were not budgeted for, and funding set aside for capital improvements. Much like a household budget, the City saves up for large projects.

When developing the budget, NRS requires that communities have at least one month’s budget available as a reserve. Boulder City’s internal policy is that we keep two months’ reserve on the books, however, the general fund balance exceeds this internal reserve policy. The FY25 draft budget is balanced per NRS requirements.”

So, the top-line news is that for FY 2025, city staff expects revenue of a bit more than $40 million. Of that total, $15.2 million comes from the consolidated tax (i.e., the city’s share of Clark County sales taxes), just $2 million comes from property taxes and $13.6 million comes from solar leases. The remaining $10 million is a split between fees for services at $5.5 million (of which $4.2 million comes from the golf courses for 10% of the budget) and fees for licenses and permits at just shy of $2 million; the rest is fines and “misc.”

Budgeted expenses are pegged at $47.5 million which looks out of balance, but see the previous statement about potential spending having to be pre-budgeted. The city historically has underestimated revenues and overestimated expenses.

Increases in spending over 2024 are largely about personnel. As Budget Manager Angela Manninen put it in her presentation to the council, the last employee rate study used to determine salaries is from 2022 so it is “a bit dated.” Staff is proposing to include a 5% raise for non-collective-bargaining (i.e., non-union) employees. They are also proposing several new positions, mostly public-safety related.

Funding is needed for an animal control employee whose part-time position was made full-time in the FY ‘24 budget. BCPD is requesting two additional dispatchers and the fire department is requesting three new firefighter positions. Manninen said in her report that overtime savings will help offset some of the cost.

“Right now,” she said, “Boulder City has no extra firefighters. So, if someone goes on vacation or is out sick, someone else has to work overtime at higher cost.”

The estimated cost for three firefighters is $476,000 but OT savings are $249,000 plus $50,000 from reserves makes first-year costs $177,000.

Fiscally, the city is in good shape. Per state law, they need one month of expenses in the fund at the end of the fiscal year, which is about 8.3%. City policy calls for double that, two months or 16.6%. Manninen reported that, with just three months left in FY 2024, the city actually has 38% in reserves.

This special meeting is just the first step in the budget process and no action by the council was needed. The next step is that staff will take feedback and then put together an official proposed budget for the council’s approval.