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City finance staff: FY25 general fund closed $5.8M worse than expected; Norman Forward cash flow remains a concern
Summary
City of Norman staff reported an $11.8 million general fund balance at the end of FY25, noting a roughly $5.8 million loss and revenue shortfalls — including about $1.8 million in sales tax — while the Norman Forward fund faces near-term debt-service pressures.
City of Norman finance staff told the City Council on Oct. 25 that the general fund closed fiscal year 2025 with an $11.8 million balance after what staff described as about a $5.8 million loss, slightly larger than the $5.6 million loss the council had estimated.
Jim, a city finance staff member, said the gap between estimated and actual revenue was driven primarily by sales tax and a drop in miscellaneous “other” revenues, and that “we're about a million 8 short of where we estimated we would be” for sales tax. He said the “other revenue” shortfall largely reflects lower court-related convenience and technology fees after the city stopped passing a merchant charge to customers.
The shortfall in revenues came alongside higher personnel costs, staff said. Jim told the council the city has a mandated 4% merit increase that compounds into higher benefits costs and that “expenses are growing faster than revenues are growing.” A council member asked whether that 4% applied across all city staff; staff confirmed it does.
City staff reported both revenues and expenditures were roughly $4 million below estimates in the general fund, and that some internal transfers changed from projections: a planned $2.6 million transfer to the public safety sales tax fund became roughly $212,000, and the general fund covered about $260,000 to balance the Westwood Fund and additional support to the YFAC fund. Jim said those transfers and reimbursements reduced reserves available for other uses.
Officials said the city will carry forward the $11.8 million as the beginning balance for FY26. Jim warned that because the council had budgeted sales tax “flat” relative to the FY25 estimate, the FY26 budget risks being below planned levels if sales tax receipts remain at the lower FY25 level. He summarized the general fund situation: “expenditures outpacing revenues is a problem in the general fund.”
On credit card processing, Jim estimated the city’s budgeted recovery from fees at about $750,000 and said the city currently does not pass a merchant processing fee to customers; “it's $3. So the city is eating $3 per transaction,” he said when asked how much had been charged previously.
Staff also reviewed the Norman Forward fund (referred to in the meeting as the Norman Forward fund). Jim said use tax is tracking near expectations but sales tax in that fund is below estimates and the fund will face approximately $9 million in debt-service payments this fiscal year. He described Norman Forward as “in a relatively healthy state” overall but said the financial oversight board would continue to examine cash-flow timing for FY26 and FY27 and make recommendations on project sequencing or pay-as-you-go alternatives.
Council members discussed trade-offs between issuing debt to complete projects quickly and using pay-as-you-go (PAYGO) approaches that could reduce debt service but delay construction. Mayor Holman observed that most residents favor completing projects sooner even if it requires debt.
No formal motions or votes were recorded in the discussion excerpt provided. Staff said more detailed fund schedules and materials will be circulated with council packets and to the financial oversight board for further review and recommendations.
