City of Kimball budget improving, auditor says

The Kimball City Council reviewed the 2013-2014 city budget during their regularly scheduled meeting on Tuesday, April 21.

Terry Galloway, of Almquist, Maltzahn, Galloway & Luth, CPA, presented the budget to council via telephone and outlined several positive aspects of the budget, but also defined a few areas for concern.

There are losses in several funds for operating revenue, including the electric, water and sewer funds – a trend which points to the need for a rate study.

“That’s why we need a rate study,” Galloway said. “All of those should be a positive 15 percent return.”

Galloway suggested making changes to keep operating costs down for each of these utilities as well as generating more revenue.

Galloway examined the top four revenue sources for the general fund and explained that sales tax is one of those revenues.

“Your sales tax there in Kimball has generated a lot of money on a per capita basis,” Galloway said. “So you are getting good support from the rural community, but also I believe a lot of that comes from the oil pipe company there.”

Galloway further explained that two thirds of the sales tax revenue goes into the general fund and the other one third goes towards economic development.

The general fund covers nine departments - administrative, police, fire, park, pool, event center, library, fitness center and cemetery.

The event center fell short to the tune of $22,048, and the Kimball Library lost $15,022.

“Typically there are shortfalls, expenses over revenues (at the event center),” City Administrator Daniel Ortiz said in a later interview. “The event center for all intents and purposes is a service the city provides, just because there isn’t a large enough event center in the community to cater to the events that you see there.”

Ortiz said that many communities do not offer event centers due to the cost of maintenance.

The fire department had an excess of $836, and the municipal swimming pool had an extra $1,011 at the end of the year.

Other departments operating in the black for the year include the cemetery, with an excess of $3,570, and the fitness center with an extra $4,713.

“I would say overall your efficiencies are pretty good for the general fund,” Galloway said.

The City of Kimball Administrative Department budgeted a total revenue of $204,795 ended 2014 with a deficit of $31,623.

The general fund closed out 2014 with unspent revenue of $3,680 prior to transferring the money to the golf fund, leaving the general fund at a deficit of $76,820.

“You kept the cost down in the administrative area, you are actually under what we call best practice,” Galloway said. “Police or law enforcement is a little high.”

The Kimball Police Department received nearly the entire property tax allotment from the city, at a total of $448,966. Added with that department’s other revenue, its total revenue came to $606,241, but it also ended the year going over budget by $4,735.

“It’s a major use of property tax dollars in Kimball. So I wanted to make note of that,” Galloway said.

Ortiz explained that while the police department receives the majority of the property tax, it is because the revenue is stable compared to sales tax, and is therefore used to fund public safety departments.

“I know we rely on sales tax heavily for other departments,” Ortiz said. “In the manager’s world, sales tax is always something that is very fluid.”

Council member Christy Warner asked if the best practice was to allocate that high of a percentage of property tax going to the police department.

“No, that’s a heavy amount,” Galloway responded. “You need the sales tax and other revenue sources.”

Ortiz agreed that it may be best to readjust allocations.

“We have a larger department and a higher level of service that we pay for,” Ortiz further explained in a later interview. “That is not customary across a number communities. It is not that (the department) is over budget, it is just that we are funding it at a higher level than other communities.”

City council member James Schnell said the police department has added a school resource officer and so the budgeted amount had to stretch further than in previous years.

“I believe that is why you see the big change from 2013 to 2014,” Galloway said.

“That may be something down the road as we look at this budget season, to diversify funds across the board,” Ortiz said.

Schnell also questioned the large deficit seen in the golf fund, which includes the baseball and softball fields as well. The city’s golf fund also ended the year with a deficit of $4,739, despite a transfer from the general fund of $80,500. A matching amount of $80,500 was received from an intergovernmental revenue source.

“The fund balance (of more than $31,000) is an accumulation over the past several years,” Ortiz said.

“The golf fund itself is sitting with about $80,000 we have to transfer in to make that whole each year. $80,500 represents about 20 percent of the total general taxes for operations,” Galloway said.

Ortiz asked about a best practice for the golf fund, which Galloway replied should generate a 15 percent growth on its own, as is expected of utility departments.

Though some numbers need to improve, Galloway compared 2013 to 2014 and explained that as far as debt to income ratio, Kimball’s budget is improving.

“As you can see that property tax is about $247 per person. The last year it was about $240,” Galloway said.

Additionally, state allocation was down in 2014, but Galloway said that amount will increase once again to about $155 to $160 per person.

“You do have about $425,000, a little more than that, that you carried over into Oct. 1, 2014 compared to last year of $107,” Galloway said.

Cash reserves will be used if expenditures exceed revenue, according to Galloway, and the City of Kimball ended the year with a reserve.

“You are in better shape than you were last year,” Galloway said. “Cash reserves continue to increase, so I think that is good news for all your tax payers.”