City finance staff report rising cash balances, conservative revenue assumptions and planned capital spending

City finance staff presented a first-quarter financial update to the City Council on May 6 that showed higher cash and investment balances, conservative revenue recognition practices and a schedule for remaining capital and one-time projects.

Mark (city treasurer) told councilors the city’s total cash balances had increased “from about $146 million four years ago to $210 million” and attributed the rise to capital bond draw timing, new restricted funds such as impact-fee accounts, and improved cash in several enterprise funds, including the airport and utilities.

Investment policy and yield

Mark described the city’s investment approach as safety-first with a laddered maturity strategy for liquidity and diversification across U.S. Treasuries, agency securities, commercial paper and CDs. He said the city’s target is to keep at least 75% of investments maturing inside two years and the remainder in the two-to-five-year band; staff noted the portfolio mix was temporarily off target because the city is investing two to three times per year as large receipts arrive.

Staff also explained that market yields are tied to the federal funds rate; the presentation cited a current market yield around 4.5% and summarized inflation and unemployment trends that the Federal Reserve considers when setting policy.

Revenues, expenditures and reserves

Assistant finance staff reviewed citywide revenue and expense trends through March 31. Finance reported that many city revenues are seasonal, so a number of categories (parks, utilities and permits) are below 50% of annual budgets at quarter end and are expected to ramp during the spring and summer months. Property taxes appear in the year’s first half because of scheduled payments.

On the general fund, staff said wages and benefits are near expected levels for the time of year and capital spending remains lower than budgeted at the quarter mark because many capital purchases are on order or in construction.

ARPA and one-time budget items

Pam and finance staff provided a status list of American Rescue Plan Act (ARPA)–funded projects and previously approved one-time budget requests. The finance slides list about 11 remaining ARPA-funded projects in procurement or construction, including the north fire station, generator installation, training-center work, City Hall elevator, and park and storm projects. Finance staff said the city must obligate ARPA funds by Dec. 31, 2024 and spend them by Dec. 31, 2026; staff said most projects are under contract and the city has the cash on hand.

One-time requests approved in the prior budget cycle — park maintenance equipment, police fingerprinting software, aquatic center boiler replacement and several facilities repairs — are underway and, in some cases, have been completed or are out to bid.

Councilor and staff discussion

Councilors asked about timing assumptions for revenue estimates and whether the city’s reserves are sufficient for unplanned large liabilities. Finance staff noted the city’s general fund cash level is lower than enterprise reserves and some reserves are restricted to specific purposes; they pointed to policy changes and conservative revenue estimates as actions that improved fiscal stability over recent years.

Ending

Finance staff said they will return with the next quarterly update and will include project-by-project details for ARPA and capital spending as construction and procurement proceed.