In a stunning turn of events that no one saw coming <<sarcasm>>, the Coeur d'Alene City Council rubber stamped the FY24 city budget Tuesday night knowing that if the city kept spending money at its current pace, should an emergency happen their reserves will be depleted. The council, save Dan Gookin, gave excuses and anecdotes about why the taxpayers can and should pay the new taxes, ending the discussion with a half-hearted comment about how they should continue looking at this budget to see how they can lower expenses throughout the year. Ultimately the council approved the $130 million budget in a 4-1 vote (Kiki Miller was absent), with Gookin being the dissenting voice.
City Administrator Troy Tymeson said he, as the person hired by the city to oversee the day-to-day management of city business, did not anticipate the amount new growth and the levy rate going down over the past few years. Tymeson summed up the basic reasons as to why the city is in a financial pickle now:
pandemic inflation
cost of living
higher property valuation
more new growth than anticipated which led to a lower levy rate
Tymeson implored the city council to find new revenue streams, all the while patting their backs about how "great of a job they have done in bringing people into the city."
Dan Gookin was the only dissenting voice about the budget stating there are many areas that could be cut, calling out the the arts budget (which they had just approved 5 new pieces of art earlier in the meeting) and street fund.
With the approval of this budget the city council is essentially "kicking the can down the road" for another year instead of making the hard decisions and cutting expenses so that they do not have to dip into their emergency reserves (also known as unassigned fund balance). It is almost like some council members are in an election year...<<sarcasm..sort of... Christie Wood, Dan English and Dan Gookin are up for reelection in November>>
If nothing is cut this year and no ongoing revenue streams are magically found, the city will fall below the Government Finance Officers Association (GFOA) suggested minimum: that each municipality keep at least 60 days’ worth of unassigned funds to cover regular operating expenditures in case of a rainy day. Sixty days of operating expenses is about 16% of the city's overall budget. At the end of FY24 they will be barely floating above that amount.
The entire FY24 budget is 136 pages long and gives the details and history about every fund to help the city council make the decisions about which expenses to cut, but one has to assume that they took the time to look through all 136 pages before making the decision to approve.
Recap of the highlights from the FY24 budget workshop:
Salaries/benefits are $2.7 million HIGHER than they were last year (thanks unions)
New growth can typically cover staff cost-of-living adjustments (COLAs) but now it only covers about half.
The City Administrator is patting the council on their back for the "great job the council has done at growing the city's valuation over the past few years." Doesn't mention that the city council had nothing to do with it, there was just a mass exodus from other states into Coeur d'Alene. He does mention that because the property values are so high it has made the levy rate so low and now the city is not getting as much money from property owners as they did before...
...even though the total tax revenue is almost $10 million HIGHER than it was a few years ago (if they take the full 3% from taxes).
The state legislature puts a cap on amount of taxes to 3% as well as caps on other one-time revenue funds, for example like how much money the city can take after closing urban renewal districts.
There are always open positions within the city, including open police and fire positions. Every year the city puts money aside just in case those positions are filled, and at the end of the fiscal year if there's still money that was set aside, the city uses it to cover the rest of their budget instead of dipping into savings.
FY24 is the first time in recent history that the CDA Police Department is pretty much fully staffed. They are also some of the highest-paid city employees. Because the city has employees to actually pay this year, there is none of that open position money that will be able to cover the rest of their budget, meaning that the city WILL have to dip into their savings (aka unassigned fund balance) to pay all the bills in FY24.
The problem the city is facing is that they have no new ongoing revenue streams to balance out the money taken from savings. Looking ahead FY25 the city is in the same boat, further depleting their savings if they cannot find another ongoing revenue source.
This problem of depleting the savings account is on top of taking the full 3% from property taxpayers. Even after taking as many taxes as possible, the city is still draining savings.
At the June 6 CDA City Council meeting, we learn that the Government Finance Officers Association (GFOA) suggests that each municipality keep at least 60 days’ worth of unassigned funds to cover regular operating expenditures in case of a rainy day. In the case of Coeur d'Alene, that's about 16% of the overall expenses. As one can see from the graphic above, the city will barely meet that threshold at the end of FY24. Looking ahead in FY25 one can see the city will fall below the 60-day suggested minimum if they cannot find a new ongoing revenue stream.