The Manhattan City Commission met with department heads Tuesday as discussions surrounding the 2025 budget continue.
City staff provided an overview of 2023 actual revenues, and approaches to 2024 and 2025 operations. The city is facing a projected shortfall in the cash balance due to federal COVID funds running out, and much of Tuesday’s discussion centered around how departments may be able to slash costs.
Newly-appointed city commissioner Jayme Minton suggested more difficult conversations about budget cuts could be looming.
“We can’t continue to outspend our revenue into that and so we have to get probably pretty extreme in the discussions that if revenues aren’t going to increase, how do we actually match our spend to that revenue,” she said.
The 2023 actual cash balance was $11 million dollars and is projected to decrease to $7 million at the end of 2024, and remains with just over a $1 million at the end of 2025. City staff have stated in the past they prefer to not let that balance dip below $10 million threshold because it provides sufficient cash reserves, supports the city’s overall financial stability and creditworthiness.
Commissioner Karen McCulloh offered another idea to help offset any potential shortfalls.
“We do have other options. We can raise the mill rate, and while there’ll be incredible outcry, you know, one mill increase on a $200,000 house is $23. So if nothing else, we can keep the mill rate flat because we know there’ll be added (revenue), besides cutting everything to the bone,” she said.
Commissioner John Matta cautioned against such an approach.
“Yeah we have the mill levy but just looking at this 2025 projection and coming in at one $1.4 million, there are easy things (to do) if you want, but it’s a $9 million tax increase wherever you put it. It’s a $9 million tax increase and I think people are going to ask a lot of questions with that and going to want a lot of reductions to help offset that,” he said.
The commission took a broad look at where departments may be able to limit spending in certain areas, due to a depleting cash balance of one-time federal COVID funds. Most departments have initial projections on how to cut costs, however commissioners noticed that the finance division had budgeted more than previously.
Finance Director Rina Neal says the key need of the finance department is hiring staff for long-vacant positions such as the budget officer, comptroller, and accountant positions.
“Historically we’ve been about 20 to 35% below budget every year because of the vacancies so dating back to 2019 and 2020 because we did have the retirement of our previous finance director,” she said.
Recruiting and retaining staff remains a consistent challenge for that department, according to Neal The department currently relies heavily on external consultants, who are behind on the 2022 audit.
Interim City Manager Jason Hilgers echoed some of Neal’s concerns.
“It’s a professional staff that we absolutely need. It’s not really a budgeting issue, it’s really more of a recruitment and retention issue that we keep having a cycle of in finance and I’ve seen us operate at dismal levels of staffing, and it impacts us financially,” he said.
Commissioners will have another in-depth discussion at the June 25 work session. The city will finalize its budget in September.
