Mt. Vernon reviews midyear budget; city to make up missed pension contributions and resolve TIF accounting

The Mt. Vernon City Council met in a special budget workshop on Jan. 29 to review the 2025–26 budget through the second quarter (Oct. 31, 2025). City Manager Nathan McKenna led the presentation, reporting that most operating funds are within expected ranges but highlighting several items the council will track at the next quarterly review.

McKenna said the General Corporate Fund (Fund 01) had expenses of 49% and revenues of 61% through the second quarter, leaving a working fund balance of $12,610,201, or roughly 6.7 months of operating reserves. He cautioned that special events during the year—chiefly an incident in July that increased police overtime and additional emergency training—could raise costs.

Other funds reported by staff included the Motor Fuel Tax Fund (Fund 10), with a working balance of $315,380 after last year’s Old Fairfield Road project; the Sanitation Fund (Fund 12), operating under a contract with Republic through April 2027; and the Rec Center operating fund (Fund 16), which holds activity separate from construction bond proceeds and is showing $76,087 in revenue from the local 3% cannabis tax.

McKenna also reviewed the Quality of Life/Economic Development Fund (Fund 24), which is largely dedicated to 2020 bond payments and showed a working balance of $726,887. He said the city applied for a Streetscape Grant but did not receive it, and that a completed OSLAD grant project funded Lincoln Park improvements.

During the audit and bond-review process, staff identified an error in pension accounting. “One issue found during the bond process and audit was that a portion of our contributions to the police and pension funds were not made last year,” McKenna said. He reported the amounts were collected but checks were not issued for 2023–24 and 2024–25, totaling just shy of $1 million; the city intends to issue the payments to make the funds whole and no penalty has been assessed to date.

Staff flagged a separate accounting discrepancy involving the Route 15/I‑57 (Eastside) TIF (Fund 73). McKenna said Fund 73 shows a working balance of -$635,489 because of a $3.4 million loan from General Corporate and a $585,346 loan from the Industrial Park Conservation Area (IPC), which are reflected across funds in a way that requires reconciliation. He said staff expects to clarify the entries and provide a corrected accounting at the third-quarter budget workshop in March and that the city is working on a potential TIF extension.

Capital items paid from sales-tax funds were also noted: the Home Rule Sales Tax Fund (Fund 25) included a $26 million placeholder for bond proceeds for the Rec Center and paid for recent equipment purchases including a dump truck, street sweeper, backhoes and a skid steer. The General Corporate Capital Projects Fund (Fund 30) includes purchases of property near Lincoln Park and S. 27th Street and loan payments for a new firetruck, leaving that fund with a working balance of $463,858.

Other fund notes: the Health Insurance Fund had a working balance of $3,042,090; the Water Fund reported a $4,191,061 balance with $3 million budgeted for a new public works building; and the Sewer Fund showed a $1,485,749 working balance. Staff also reported that the Midtown sewer relining project (CDBG Fund 55) is complete while an EPA-funded sewer main relining in South Town (Fund 56) remains in progress.

The council did not take action on budget items at the workshop; staff said the audit completion allows the city to present a third-quarter workshop in March with updated numbers. The meeting adjourned following a unanimous motion at 4:05 p.m.