Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Budget Reallocation Credit Card Fees topic
No spam. Unsubscribe anytime.
Fort Smith board reallocates past credit-card fees, shifting costs to general fund; measure passes 5-2
Summary
The Board approved an ordinance reallocating incurred credit-card processing fees from enterprise funds (water/sewer, solid waste) back to the general fund for 2024 and partially for 2025, a move intended to relieve those enterprise funds but that drew debate over its impact on the general fund and bond covenants.
The Fort Smith Board of Directors voted 5-2 April 1 to amend the 2024 and 2025 operating budgets to reallocate credit-card processing fees incurred in February 2024 and to adjust budget entries for 2025.
Chief Financial Officer Andy Richards told the board the reallocation would move $150,000 back to the general fund for 2024 while relieving the water and sewer fund of $650,000, solid waste of $148,000 and street maintenance of $43,000 for 2024. For 2025 to date, Richards said the proposal would return $171,000 to the general fund, provide $125,000 in relief to water and sewer and $47,000 to solid waste. Richards also presented an estimated full-year adjustment for 2025 that would remove remaining budgeted credit-card fees.
"In all, for our projected '25 general fund, this would, you know, basically, we're taking another million dollars out of the general fund by this reallocation," Richards said during his presentation. He calculated the city's contingency reserve at 16 percent after the adjustment, below the board's 20 percent target.
Public comment varied. Resident Chris Cadelli said the transfer would provide relief to utility funds but urged the board to instead restore $4.2 million to the general fund by moving the planned water-slide capital expense back into the general fund. "I think that would resolve our issue," he said.
Board members split over the broader fiscal philosophy. Director Christina Katzavas asked whether the reallocation was a one-time hit because the board had already voted to end the city's practice of paying credit-card fees going forward. Richards confirmed the measure reflected prior policy changes and was primarily a retroactive accounting decision. Director Goode said he remained concerned about moving costs to the general fund rather than keeping them with the enterprise funds that incurred them. Director Kemp asked whether bond covenants and credit ratings factored into the decision; Richards noted rating agencies had placed a negative outlook on the city's water and sewer debt and that analysts consider revenue-generation and progress on the consent decree when assessing ratings.
The motion to adopt the ordinance passed on a roll call vote: five in favor, two opposed. Directors Rigo and Goode recorded "No" votes; the other board members voted "Yes."
Director Katzavas requested the first-quarter financial report for 2025 be prioritized and available by mid-April to inform ongoing budget work. CFO Richards said the city would close the books in mid-April and could provide the report then.
The ordinance does not change long-term policy on who will pay future credit-card fees; the board previously voted to shift future processing fees onto customers. The vote on April 1 applied only to the identified past charges and the 2024/2025 accounting entries described by Richards.
