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Council told of budget shortfalls: staff proposes temporary street-fund subsidy while crafting long-term fixes
Summary
Finance staff reported the FY2024 general fund closed in deficit and that previously budgeted transfers from the utility fund are not sustainable. Staff proposed using the street fund as a one-time subsidy while preparing budget amendments and longer-term measures to rebuild reserves and segregate utility and general fund finances.
Angleton City Council on Jan. 14 was briefed on reconstructed budget books for fiscal year 2024'25 after the city's prior finance director departed and staff found multiple discrepancies.
Finance staff said the FY2023 general fund closed with about $3 million fund balance but that FY2024 closed with deficits: the general fund showed an approximate $570,000 deficit and the water fund about a $670,000 deficit in preliminary closeout numbers. Staff said transfers from the utility fund to support the general fund in prior years totaled about $1.545 million in the adopted budget, a practice staff said cannot continue without repayment terms and proper segregation of funds.
Staff described corrections made while reconstructing the budget in Excel, including recognition that property-tax revenue had been overstated and that a 2 percent cost-of-living allowance added $224,000 to personnel costs. Staff recommended a short-term plan to balance FY2025: temporarily use available street-fund balance (about $2.12 million per staff figures) to cover the general-fund gap for the adoption of the budget and then enact a budget amendment and a repayment schedule to restore the street fund.
Interim Finance Director Susie Hernandez and finance staff urged conservative budgeting for coming years to rebuild reserves (the city policy target was cited at 30 percent, and staff said current reserves do not meet that level). Staff also recommended segregation of utility and general-fund costs and suggested repayment terms for any cross-fund transfers. Staff said they will submit the reconstructed budget and proposed amendments to council by email and will forward the FY2024 trial balance to the auditors to start the formal audit.
Council members asked about options if regional funding (e.g., sales tax and HGAC grant outcomes) does not materialize and discussed levers such as delaying capital projects, re-evaluating fleet purchases, and pursuing right-of-way acquisition timelines for large projects. Staff said they will provide administrators'level cost-cutting recommendations (overtime, comp time, hiring freezes) and return with concrete budget amendments.
No final budget amendments were adopted at the meeting; council directed staff to continue the work and to bring ordinance-based budget amendments to reconcile funds once the council has direction.
