The Granite Falls City Council met with Justin Nilson and Jean McGann from the financial consulting firm Abdo, Erick, and Meyer at the start of their regular council meeting on Monday, March 18. The pair presented their long-term financial overview of city finances, and discussed with council members the current state of municipal finances and what to expect down the road.
McGann explained that they based their report on several key assumptions; that overall operating expenses (and certain operating revenues) will increase by 3%, salary and benefit expenditures will increase at a rate of 2.5%, and that the interest earned on cash held in the city’s name will hold steady at 2%. They also expect population to remain steady for the foreseeable future. The two also examined how future action will impact future trends.
For example, McGann said that in order for the city to obtain a cash reserve balance equal to 100% of current year debit service and 50% of future year operations, the water fund would need a projected 10% rate increase this year in addition to a 5% increase per year thereafter (2020-2023). The report also recommended that the city transfer funds directly from the electric fund and/or the liquor store fund directly to the KCC operating fund.
The firm also suggested that the city levy directly to the capital improvement fund instead of continually transfering money in. Another finding of the report was that the motor vehicle fund is currently operating at a deficit. McGann said that she believes this situation will reverse as previously implemented staff changes will allow salary expenses to be included in other funds so as to reduce future expenses.
Future rate fee increases expected from the state government will also help boost revenue. McGann also recommended that the city consolidate several funds pertaining to activities within electric, water, and sewer funds. No action by the council was needed for the report but the council will give consider the recommendations in the future.