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Selma budget draft shows conservative revenue, 20% reserve policy and council debate over land purchase impact
Summary
City finance staff presented a conservative draft FY 2025–26 budget that maintains a 20% general‑fund reserve policy; council members pressed staff about falling general‑fund balances and the $1.5 million land purchase that contributed to recent net losses.
Selma City staff presented a proposed FY 2025–26 budget on May 28 that uses conservative revenue projections and retains a 20% general‑fund reserve policy adopted in 2022. Finance staff said the city’s ending projected fund balance is about $14.74 million and that the reserves are set aside to cover roughly three months of operating expenses.
At the meeting, the finance director (unnamed in the transcript) and council discussed the city’s recent general‑fund trajectory: adopted revenues of about $21.2 million, estimated revenues at $19 million in the current year, and a projected net operating deficit of $1.9 million for the coming year that staff attributed in part to a prior property purchase at McCall and Nelson. Council members repeatedly asked about whether a 20% reserve was sufficient and whether the city should consider raising that target to better weather future downturns.
Why it matters: councilors stressed the city has seen a multi‑year decline in the general fund (from roughly $30.7 million to $20.4 million in past years per staff presentation) and asked for a more conservative posture and better accounting clarity. One council member said he has seen reserve policies range from 20% to 35% in other cities and urged the council to consider raising the policy.
Key numbers and clarifications discussed in the meeting: the city reported an adopted revenue baseline of about $21.2 million, an estimated $19.0 million actual for the current year, and a $1.9 million projected shortfall in the upcoming budget that incorporates the prior land purchase of roughly $1.5 million. Staff explained the 20% reserve reflects a 15% restricted operating reserve plus a 5% emergency reserve as set in the council’s fiscal policy adopted in June 2022.
Council and staff also reviewed several line items and one‑time items, and finance staff agreed to follow up on detailed questions about debt service, pension‑related payments, and particular expenditure anomalies from the 2022–23 audit. Several council members urged the finance department to return with scenarios showing the budget impact of raising the reserve policy.
What’s next: staff will provide follow‑up detail on debt‑service accounting, the pension‑related entries in prior audits, and possible reserve policy adjustments for council consideration before budget adoption.
