Finance committee: bond issuances drove 2025 revenue spike; operating revenues held steady

Marla (finance staff) told the Finance Committee that the city’s increase in total reported revenues for 2025 was driven almost entirely by debt proceeds and not by recurring operating revenue. "The increase in total revenues is capital driven, not operationally driven," she said, emphasizing that bond proceeds are restricted to capital projects and cannot be used for payroll or general operating expenses.

Kelly (finance staff) provided updated figures during the discussion, saying debt proceeds totaled about $152,000,000 in 2025 compared with roughly $32,000,000 in 2024. Committee members and staff agreed that excluding bond proceeds, core operating categories such as property tax, permit fees and service revenues showed no structural decline.

Why it matters: The committee said the distinction between financing activity and recurring revenue is important for budgeting and long-term planning because bond proceeds increase reported cash balances but do not expand operating capacity. Marla noted the city created new restricted bond funds (typically in the 300-series) and some enterprise/restricted funds in the 200-series, and that higher total cash balances reflect capital financing activity and timing rather than increased recurring authority.

The committee also reviewed the year-end appropriation analysis and department-by-department outcomes. Marla explained that some individual line items were overspent but that departments generally absorbed those variances within their total appropriation. She provided a line-level example in Administration: a $128,006.89 total overage across four lines, with specific overages of $3,511.68 in supplies, $107,009.29 in consulting, $32.97 in postage and $17,216.23 in travel and training; encumbrances were removed and the department was brought into compliance.

Several departments were singled out: Police ended with more than $1.6 million and no department-level overages; Economic and Community Development had about $51,383.71 in overages and $87,000 in encumbrances but still closed with a positive ending balance; Facilities and Events finished with a strong alignment and a $444,801.35 ending balance; Parks had modest overages mostly tied to unbudgeted gas and heat costs and a $320,002.91 encumbrance balance.

Staff described common causes for encumbrances rolling across years, such as multi-year purchase orders for equipment (Marla gave dump trucks as an example), and said the finance office is instituting internal controls to clean up old PO encumbrances that show no activity.

Investment and reserves: Committee members asked about the city’s $2 million health and dental reserve, which Kelly said is intentional given the city’s self-funded exposure. Kelly and Marla described that the reserve already earns interest through a combination of corporate cash, a money-market account and treasuries, and they discussed options to segregate the reserve into its own fund while keeping it sufficiently liquid. Marla agreed to pull together interest and investment-return detail for the next meeting so the committee can evaluate options for short-term investment and laddering.

Legislative watch and next steps: Patrick (council member) flagged House Bill 1001 as impending state legislation that could change how road impact fees are collected and used; staff and members agreed to monitor the bill closely and schedule a follow-up to assess budget implications. Kelly said she is developing improved cash-flow and fund-level reports (using Jet Reports and working with Finley Cook) that will separate DLGF-approved and non-DLGF funds to give council better visibility.

The committee requested additional, targeted reports on encumbrances, fund-by-fund cash flow and investment returns for the next meeting. Marla and Kelly agreed to provide those materials and to follow up on specific questions (including a road-impact fees timing question Kelly will research with John Veil). The meeting adjourned after members identified items for future agendas.