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Shelton finance report: estimated $6.7M fund balance, using over $1M of reserves as revenue lags expenses
Summary
Staff presented the November financial report showing an estimated general fund balance of about $6.7 million with 20% reserved by policy. The city used more than $1 million of fund balance to cover 2024 operations; property tax receipts were about 5.5% below budget while sales and business taxes outperformed estimates.
City finance staff told the Shelton City Council on Monday that the city's estimated fund balance for November stood at about $6.7 million, with 20 percent earmarked as a policy reserve and more than $1 million of the remaining balance used to cover operations as revenues lagged ongoing expenses.
"We have an estimated fund balance of just over $6,700,000, and I want to remind the council that 20% of that amount is reserved for policy," the staff member presenting the report said. The presenter added the city typically relies on the reserve to smooth cash flow between property tax collection cycles and to avoid short‑term borrowing.
The presenter (referred to in the meeting as Mr. Gibbons) said property tax receipts were about 5.5 percent below the adopted budget, a larger shortfall than the city's typical 3 percent variance. Offsetting that, sales tax was about 3.4 percent over budget and business & occupation tax collections were about 7.2 percent over budget. Building permits exceeded estimates by roughly $100,000, and plan review fees for engineering and community development were higher than budgeted.
The report showed a large percentage increase in a small "miscellaneous revenue" line (about 348 percent over budget), driven by higher investment interest, opioid settlement proceeds, proceeds from the sale of an abated property, and donations received by the police department. Staff described those items as largely one‑time or volatile revenue sources.
The presenter noted the fiscal year ends Dec. 31 and the city keeps the year open for 20 days to post late invoices; the November report is based on estimates prepared in December and will be refined in next month's year‑end statement.
On expenses, staff said they were running close to budget for November. The presenter warned that because the city already used more than $1 million of fund balance to balance 2024, the council should expect to discuss service levels and budget priorities this spring as departments prepare the 2026 budget.
Councilors asked about the rise in insurance costs. A council member asked, "So Mr. Gibbons, we increased our insurance payout more than double in about three years. How much of that is actually that percentage going up ... and how much of it is price gouging?" The presenter described the city's participation in a pooled insurance program and said replacement costs for buildings and higher liability exposures — particularly related to law enforcement — are driving higher premiums.
The presenter also noted the citywide vacancy rate was about 6.5 full‑time equivalents, with 3.5 of those vacancies in the general fund.
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(Report to be finalized in next month's year‑end financial statements; staff recommended follow‑up discussions on service level priorities during the spring budget process.)
