Tough balancing act: PN may dip into reserves to offset industrial losses
PORT NECHES — Financially speaking, Port Neches city had a difficult year.
Balancing a budget with minimal growth of industrial revenues coupled with operational requirements is not a unique scenario among municipalities. In Port Neches this is leading to the idea of dipping into its fund balance to the tune of $399,000.
“It’s been a difficult year. I usually talk in terms of balancing a budget but this year is different,” City Manager Andre Wimer said during Thursday’s council meeting.
In a broad sense, the fund balance is like a savings account to be used in emergency situations and not something that should continue to be used on a regular basis. Should there be a catastrophic event, such as a hurricane, that money would be needed just as it would be needed for a city.
“The proposed budget for fiscal year 2016-2017, as presented, incorporates previously stated city council preferences relative to personnel, and is, therefore, dependent upon the utilization of fund balance,” he said. “While certainly not preferable, it is, therefore, necessary in this situation and hopefully will be a one-time occurrence.”
The drop in industrial revenues results from world-wide economic factors making funding of city services a challenge.
“In past situations, the volatility of industrial revenues has been an issue; the immediate concern now, however, is the lack of upward adjustment. Due to overall operational requirements, utilization of fund reserves is a consideration for the fiscal year 16-17 budget,” he said.
While the total $16.8 million budget is a work in progress, there are some highlights Wimer explored for discussion.
The general fund, which is the part that primarily covers governmental functions, comes in with revenues of $9.5 million while expenditures come in at $9.9 million. The projected use of $399,000 of the fund balance will even out the number.
Most revenue streams remained constant; sales tax revenue is expected to be $900,000 and the franchise fees are projected at $780,000.
Property tax revenue is projected at $4.24 million, an increase of $244,000.
Expenditures include a 2 percent cost of living increase for employees that accounts for $92,000 of the budget. Step increases for other employees will cost $82,000 and adjustments related to a salary survey will take $85,000 from the general fund, he said.
The proposed budget also includes the purchase of two police department patrol vehicles in the amount of $64,000, purchase of three self-contained breathing apparatus for the fire department costing $22,000, purchase of a pickup truck for the streets and drainage department at $27,000 and an expenditure of $425,000 for costs associated with retiree insurance coverages — which is an increase of $45,000 over last year.
The proposed budget also includes a $1 per month increase to the base rate of the water rate structure.
“This has been discussed in the past and efforts remain in progress to ensure the long-term financial stability of the water and sewer fund.
The proposed tax rate of .7050 per $100 valuation is one-cent more than last year’s rate of .6950 per $100 valuation.
Wimer explained the slight increase would have minimal effect on homeowners. For example, a home worth $100,000 saw a $556 tax bill with homestead exemption under last year’s rate. Under the new rate the bill would increase by $8.
No action was taken on the proposed budget and discussion will continue in future council meetings.
Mary Meaux: 721-2429