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Council flags general‑fund reserve risk and franchise‑fee receipts shortfall; asks staff for deeper review
Summary
Council members raised concerns that steady budget overruns across departments and lower-than-projected franchise-fee receipts could deplete the general-fund reserve; staff were asked to run deeper expense reviews and return options ahead of levy deadlines.
A recurring theme at the Feb. 13 budget workshop was concern from council members that the city’s general fund has repeatedly run deficits in recent years and that, unless spending controls are strengthened, the city could erode reserves.
Key points from the discussion
- General-fund reserve: Staff reported a general-fund cash balance of roughly $1.7 million at the time of the workshop and reminded council of the city’s reserve policy (the policy percentage was discussed in the meeting; staff said they would confirm the exact percentage and the dollar target and circulate that data). Council members said $1.7 million provides limited flexibility for unplanned costs and suggested the city should aim for a noticeably larger annual budget surplus to rebuild reserves over time.
- Historical deficit pattern: Council members and staff reviewed five‑year budget trends that showed multiple departments running over their adopted budgets in the presented period. Staff cautioned that some department overruns are offset in city accounting by transfers from other funds or one‑time receipts in other years (for example, ARPA/CARES-related dollars in FY21), and said staff will present a clearer, reconciled five‑year accounting that shows recurring versus one‑time effects.
- Franchise fees and utility receipts: Finance staff highlighted that franchise-fee receipts (payments the city receives from utilities such as Alliant Energy and REC) were lower than the packet’s original FY25 assumption; staff said receipts received so far and recent quarterly payments point to FY25 franchise revenue being below the budgeted $4.3 million and that FY26 was conservatively budgeted at $3.7 million. Staff said they will reach out to utility representatives (Paula at Alliant was named) to ask why receipts are lower and to reconcile payment timing, seasonal effects, and any structural changes (for example, customer billing patterns or transmission changes). The council asked staff to report back with a reconciliation and a recommendation.
Council direction and next steps
Council asked staff to run a deeper multiyear expense review for department heads, focus on low‑value recurring operating lines (printing, office supplies and similar commodities), and return with a set of achievable reductions the finance director can implement administratively and with the department heads’ cooperation. Staff said they will also model levy outcomes if the city does not use the health‑fund buy‑down and will return the final numbers in time for the March proposed‑levy posting.
No vote was required on the reserve discussion; council set a path for staff follow‑up and asked that the updated analysis be available before the next public‑hearing and levy‑setting actions.
