Edmond workshop hears conservative budget assumptions after economist warns households are "stretched"

Dr. Russell Evans, an economist with Regional Economic Advisors and the Thornburg Collectorate, told the Edmond City Council at its special budget kickoff workshop that national and regional conditions leave households “stretched” and that the city should budget conservatively for fiscal 2025 while planning for a possible rebound in fiscal 2026.

Evans said the national labor market has moved toward balance after Federal Reserve rate increases, but consumer credit is strained: household debt-service ratios and delinquency rates are near levels last seen in 2012. “We have you down 1.4% to end this fiscal year and up 6.6% next year,” Evans said, summarizing the firm’s sales-and-use-tax forecast for Edmond while noting that forecasts assume no outside shock such as a major stock-market correction or abrupt policy change.

The forecast matters because sales and use taxes make up the largest share of Edmond’s tax revenue. Kathy Bayless, speaking for city finance staff, told the council that the city budget assumes flat revenue for the coming year and reminded the council that it must adopt the budget by June 15. “We have to adopt the budget by June 15,” Bayless said.

Why this matters: sales and use taxes fund operations, capital improvements and public safety staffing. Bayless said sales and use collections total roughly $105,000,000 in the current fiscal year; the city allocates those receipts roughly 60% to capital and enterprise distributions and splits the sales-tax portion so that 2 percentage points (about $46,000,000) flow to the general fund and are divided among police, fire and general operations. Bayless warned that one percentage point of the city’s sales-tax structure is scheduled to expire in March 2027 and that the total revenue at risk if expiring measures are not renewed would be about $40,000,000.

Key takeaways from the presentation and staff briefing

- Regional and local labor markets: Evans said Oklahoma’s labor market is stronger than the national average, with roughly 1.7 job postings for every unemployed person as of late 2024, supporting job and income growth locally. He said the Oklahoma City metropolitan area was projected to add about 18,000 jobs in 2025 (roughly 1,500 jobs per month), led by health care, trade/transportation/utilities, leisure services and construction.

- Demographics and retail leakage: Evans highlighted Edmond’s population growth and age profile, noting Edmond’s continued growth (forecast roughly 1.1% in calendar years 2025–26) and a comparatively large share of residents aged 10–24. He and councilmembers raised the issue of retail “leakage” — Edmond residents shopping in neighboring jurisdictions while commuting to jobs outside the city — as a possible reason Edmond’s long-run sales-tax growth has moderated.

- City revenue assumptions and splits: Bayless gave staff revenue assumptions and fund-split details used in the draft budget. She said sales-and-use tax is 3.75% overall (2% to the general fund, 0.75% to CIP, and smaller fractions to fire, police and parks) and that sales tax and use-tax together were budgeted conservatively (staff has budgeted flat for next year). Bayless noted that use tax has shown stronger year-over-year growth and helps offset some sales-tax softness.

- Forecast uncertainty and data noise: Both Evans and staff flagged unusual noise in recent remittance data tied to the state’s grocery sales-tax exemption and remitter adjustments; Evans said those accounting effects complicate near-term interpretation of monthly receipts and can exaggerate month-to-month swings.

- Debt and capital: Bayless and staff reviewed the city’s capital-improvement funding and debt profile. They said the 2000 CIP (0.75%) provides about $17 million annually (used largely for debt service), and the 2017 CIP half-cent provides roughly $11–12 million annually. Staff discussed outstanding debt tied primarily to utility projects: staff estimated water-related debt accounts for the largest portion (staff cited figures in the discussion roughly in the $700–820 million range, with “about 83%” tied to water projects), electric debt of roughly $20 million (planned but not yet spent), and the remainder associated with city-level debt service. Bayless emphasized that enterprise fund debt (water, electric, wastewater) is paid from enterprise rates rather than the general fund.

- Reserves and conservative budgeting: Bayless reiterated the city’s policy goal to maintain roughly a 10% unrestricted general-fund balance (about $10 million) and said staff plans conservative revenue estimates so council will have room to discuss cuts, delays or other adjustments if receipts underperform. She said the finance team is using new reporting software to produce more timely analyses for council review.

Other items discussed

- Community Agency Review Committee (CARC) funding for nonprofits, airport matching funds and grant activity: Bayless said community and airport projects receive external grants and noted the city’s participation in a matching arrangement for Guthrie Airport upgrades; she credited federal assistance from congressional offices for recent FAA funding.

- Timeline: Bayless and staff outlined the budget calendar and upcoming workshops (public safety budgets March 24; EPWA utility budgets April 14; non-utility capital, general fund and CARC recommendations April 28), a public hearing in May and a budget adoption target in mid-June.

What was not decided: The workshop was informational; there were no council votes on tax changes, renewals or appropriations at the session. Staff presented projections and asked the council for input as departments finalize budget entries.

Meeting context and next steps: City staff said departments prepared their own budget submissions this year (a change from the previous year), giving department managers greater ownership of line items. Staff will continue compiling allocations and present updated budget materials at the scheduled workshops and the public hearing on May 12 before returning to the council for final action in June.