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Shelton finance director reports $6.7 million estimated fund balance; insurance costs drive reserve use
Summary
Finance director reported an estimated Nov. ending general fund balance of about $6.7 million, noted 20% reserved policy, and warned ongoing expenses exceed ongoing revenue; councilors questioned rising insurance costs.
Shelton's finance director reported that an estimated fund balance for the general fund is just over $6.7 million and reminded the council that city policy reserves 20% of that balance.
Finance director Mr. Gibbons told the council the remaining unreserved balance will be needed to balance the 2025 budget. "Our ongoing revenue did not meet our ongoing expenses," he said, adding that the city used a portion of fund balance to smooth cash flow between property tax collection periods and to cover a large accounts‑payable batch in January that included liability insurance payments.
Why it matters: the report frames near‑term budget choices and signals staff will return in spring to discuss service‑level priorities, budget assumptions and potential adjustments.
Key points from the report
- Estimated fund balance: Mr. Gibbons said the estimated fund balance is "just over $6,700,000," with 20% reserved by policy and about $1,000,000 of that balance supporting the 2025 budget.
- Revenue performance: The general fund revenue exceeded budget by roughly $1 million driven in part by higher sales tax (3.4% over budget) and business & occupation tax (7.2% over budget). Building permits and plan review fees also exceeded budget expectations.
- Property tax collections: Property tax revenue is about 5.5% below budget, larger than the council's typical variance of roughly 3%.
- Miscellaneous revenue: A small budget line was 348% over due to higher investment interest, opioid settlement receipts, proceeds from a sold abated property and donations to the police department.
Council questions and insurance costs
A council member asked whether the city's insurance costs more than doubled in about three years and whether that reflected increased risk or price gouging. Mr. Gibbons said the city participates in a pooled insurance arrangement with other Washington cities and that replacement and liability costs have risen. "We're well covered," he said, noting higher replacement costs for buildings and increased liability exposure related to law enforcement.
Next steps
Mr. Gibbons said staff will finalize year‑end accounting in the coming month, present December figures and then begin spring conversations with council on budget priorities for 2026. He warned that the city may continue to draw on fund balance if ongoing revenues do not match expenses.
Ending
The council asked follow‑up questions about insurance and cost drivers; staff reiterated that they will bring a more complete year‑end financial statement at the next meeting.
