City finance director reports revenue growth but rising expenditures and salary overages

City finance staff presented a second-quarter revenue and expenditure report showing year-to-year revenue gains in several funds but faster growth in spending, prompting council members to press for more detail on wages, overtime and long-term budgeting.

Ken Hunter, the finance presenter, said general-fund revenues through the second quarter were up about 4.1% compared with the prior year while expenditures grew 16.2%. Hunter told the council the higher spending rate was driven primarily by employee compensation and professional services and that the growth rate had declined from the first quarter.

Hunter said sales-tax receipts were running below forecast — he estimated about 5% below forecast, which he put at roughly $600,000 — and attributed much of the shortfall to collections in Nash. He also noted improvements in sales-and-services revenues and solid-waste operations.

The presentation reviewed individual utility funds: electric sales were about 2.5% higher for the first six months; gas sales were down roughly 25% (driven largely by seasonal demand and lower usage by some larger customers); water revenue was up about 6.6% following a rate increase; and sewer sales rose about 14.2%, in part because of wet-weather impacts. Hunter said the water fund was running a small operating deficit of about $196,000 as of December and that staff expected the deficit to narrow by fiscal year end.

Council members pressed on payroll. One council member said six months of wages and salaries totaled about $28.7 million and that figure was "$3,200,000 above budget for 6 months," asking how the city would bring year-end salaries back toward a roughly $49 million target. Hunter said departments have used hiring freezes and completed consulting-contract closeouts and that staff will present a more detailed review, including classification and compensation impacts, at a future meeting.

Council members requested a breakdown of overtime and part-time spending for affected departments and said they planned a closed-session review of the pay plan’s implementation. Hunter said staff aim to look for offsetting savings and cautioned that he could not guarantee the rainy-day fund would not be used but anticipated additional property-tax revenues that could reduce shortfalls.

Staff identified upcoming capital work financed in prior years and noted the timing effect on posting purchase costs in the electric fund. The presentation closed with an outline of major capital and resurfacing projects to be carried forward into fiscal 2026 planning.