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Finance report: Q1 timing boosts interest income; wastewater treatment plant funding and expenditures detailed
Summary
City CFO reported timing-related variances that made Q1 results appear favorable, reviewed sales-tax trends and gave an extended report on wastewater-treatment-plant funding: project funding mix, grant/reimbursement timing, expenditures to Burns and Mac, bond proceeds, and cash on hand.
The city’s chief financial officer told the council the first-quarter financial results reflect timing differences in revenue and spending, and provided a detailed update on the wastewater-treatment-plant project and the city’s cash position.
"From an actual versus budget perspective on both revenue and expenses, we're better than budget at this point in time," Bob Ford, the city’s chief financial officer, said, cautioning that the result is driven by timing. He said interest income is higher because cash from large capital projects has remained in the bank longer than expected and that personnel savings reflect positions not yet filled.
Ford gave a multi-page presentation on the wastewater-treatment-plant project’s funding and expenditures. He described the project as a roughly $138,000,000 undertaking and said about 64% of funding has come from debt sources and about 36.2% from grants. He said two major grants included a $25,000,000 DNR grant funded on a 70/30 basis (DNR/recipient) using ARPA-related dollars, and another $25,000,000 currently in the state budget on the governor's desk that would reduce borrowing if signed into law.
Ford said the city issued a series-22 bond at a premium and received about $48,500,000; after setting aside $5,200,000 for the administration building, the residual (about $43,400,000) was used for the wastewater project. He said the city has spent about $76,800,000 with Burns and Mac on the project and an additional $3,200,000 on items that are not grant-eligible, leaving approximately $12,800,000 available to spend on the plant as of an April cash check. Ford said the city is working with DNR on reimbursements and has run scenarios showing the city can spend the $25,000,000 tranche by the end of the fiscal year; his message was "we don't want to leave a dollar on the table."
Ford also reviewed sales-tax reporting changes (moving to revenue-as-earned rather than received) and said five-month comparisons show modest year-over-year growth partly driven by marijuana-sales tax; growth excluding that stream was smaller. He provided an overview of restricted and unrestricted cash balances (about $40.6 million total as of March 31, including approximately $14.3 million restricted for wastewater), and noted several small debt principal payoffs scheduled this fiscal year that will free up debt service going forward. Ford concluded that, while first-quarter numbers look favorable, most variances are timing-driven and spending on major capital projects will accelerate over the year.
Council members asked about audit timing and other follow-ups; Ford said the auditor's field work was nearly complete and a readout was tentatively scheduled for the June 17 meeting.
