Mr. Marsh warns Greenwood faces sales-tax shortfall, urges $1.125 million contingency target

Mr. Marsh presented the Greenwood City Council’s quarterly financial review on Oct. 15, 2025, telling members the city is tracking a cumulative decline in city sales-and-use tax receipts of about 3.8% year-to-date and that the shortfall will affect multiple departments and the traffic-relief bond.

He said part of the 2025 decline stems from a February $115,000 sales-tax rebate and audit adjustments, and that, after those items, retail sales in Greenwood are down roughly 0.8% year-over-year — a swing Mr. Marsh estimated at about $1.3 million compared with the same period in 2024. "When you add back the rebate and the audit adjustments, we're still down .84% and that equates to about a $1.3 million swing," he said.

Mr. Marsh emphasized the strain on operating accounts across departments and the strain on capital programs. He reported consolidated figures for the city's operating departments: nine-month revenues of roughly $19 million and expenses of about $21 million, producing an operating deficit in the reporting period. "From the operating departments we started the year at 15.8 million... we had nine-month revenues of 19 million. We had 21 million in expenses. That's $2.7 million deficit," he said.

Contingency fund recommendation

Citing guidance circulated by a municipal association (referred to in the briefing as "AML") and a cautionary example involving La Marque, Texas, Mr. Marsh urged the council to adopt a formal contingency ordinance to define when and how restricted contingency dollars may be used and repaid. He recommended a pooled contingency target equal to about two months of the six operating departments' expenses and stated a specific numeric target: "I would recommend we set it at 1.125" (referring to $1.125 million).

He explained the ordinance he plans to bring back would let the council authorize contingency draws but require departments that use contingency funds to replenish them according to rules in the ordinance. "You spend it, but you have to pay it back," he said.

Water and sewer financing options

Mr. Marsh warned that if all planned water and sewer projects are completed and funded as budgeted, the city sales-and-use tax water/sewer account could run significantly negative, which could lead the city to pursue outside financing. When a council member asked whether bonds would require voter approval, Mr. Marsh said a revenue bond secured by water-system revenues would not require a public vote, while a bond funded by a sales tax would. "That bond does not have to be approved by the voters," a council member asked; Mr. Marsh replied, "Correct. It's not using tax dollars. It's called a revenue bond and it's using revenue solely from the sale of your service."

Police, ARPA and franchise taxes

Mr. Marsh reviewed how the administration has used a mix of franchise-tax revenue and federal ARPA funds to smooth police payrolls in recent years. He said ARPA provided roughly $972,000 in an early tranche that was later allocated to water/sewer and traffic-relief costs; that reallocation and timing of other transfers affects year-end balances.

Department highlights and capital

He showed capital spending of roughly 31% through September overall, with non-water/sewer capital representing about $5 million of the total and water/sewer projects accounting for the remainder. He also called out the street fund, which began the year with roughly $4 million, has received $2 million in nine-month revenue and spent about $3.36 million — leaving a material shortfall that staff will need to cover from other sources.

Next steps

Mr. Marsh said administration will present a contingency ordinance for council consideration and bring financing proposals, including possible revenue bonds for water and sewer projects and other options to stabilize operations. No formal motions or votes were recorded during the presentation. The council acknowledged the information and asked for clarifying materials to be returned with formal ordinance language and financing options.