The City of Stillwater’s budget for fiscal year 2021 has been adopted but City Manager Norman McNickle has described the proposed budget, which was developed before COVID-19 was declared a global pandemic, as a placeholder. The City Council is required to have a budget before the new fiscal year begins on July 1. The budget councilors adopted Monday is expected to require changes as the full impact on city revenues are revealed over the next few months.
Revenue estimates were originally a little more than $120 million, but actual numbers will probably be lower.
With many businesses just now opening and record numbers of people unemployed, spending and sales tax are down and past due utility account balances are up, creating financial uncertainty for the city.
The city budget is being impacted by drops in sales and use tax collections and utility sales.
Stillwater’s electric utility usually generates about 43% of the city’s revenue for the year.
The proposed 2021 budget had originally projected it to bring in $51.3 million. Total utility revenues, including water, sewer and trash service were estimated at $77.8 million.
But utility revenues are down.
With power sales down about 13% after businesses closed or cut their hours and past due account totals climbing to $300,000, city officials are looking at a significant shortfall in that area.
The City Council has discussed payment plans to help utility customers to bring their accounts current. But by choosing an option that gives people up to six months to pay their past due balances, the councilors slowed a potential revenue stream.
The effect on sales and use tax remains to be seen. McNickle said said sales initially bumped as people stocked up on groceries and supplies but with restaurants and non-essential retailers closed, sales tax revenues are likely to be down overall.
It may be August before city leaders know how much money they actually have to work with.
In the meantime, city staff is identifying completed projects that can be closed out to get any remaining allocated funds back in the budget and holding off on projects that aren’t absolutely necessary or already in progress.
One example is a drainage project to address flooding along 12th Avenue between Duncan and Duck streets.
Bids for the project, which was to be funded by a Community Development Block Grant, came in 50% higher than expected. In order to proceed, the city would have had to come up with more than $250,000 in additional funds, so the project is being put on hold for the moment.
The Homebuyer Assistance Program city leaders resurrected last year with funds left over from a previous program, has also not been funded for the coming year.