The Woodward News

Local News

May 28, 2014

City to use some reserves in budget

A $900,000 projected loss in revenue for the City of Woodward for the 2014-2015 fiscal year has caused a freeze in pay increases for city employees.

 But capital projects already underway, such as plans for the new fire department and the 34th Street expansion, are not in jeopardy.

City leaders met for the annual budget workshop Tuesday to discuss somewhat soggy projections included in a proposed $47 million budget for 2014-2015.

The slight dip in the local economy is no big surprise to city officials who had already softened expectations in 2013 when they budgeted for this fiscal year.

But now, the actual revenues this year have fallen short of even those bearish predictions, said Woodward Assistant City Manager Doug Haines.

"Since about 2010,  we had been projecting sales tax revenue increases at about 10 percent and we surpassed those each year," Haines said. "But last year, when we thought we knew what we saw coming, we pulled back to a five percent increase (projection) but what we have ended up with so far is a six to six and a half percent loss."

The shortfall is being felt primarily in sales tax revenue, which represents over half of the revenue it takes to run city operations, according to Haines. However, all other revenue sources, such as revenue from rate payers for city utilities, are also down, he said.

Despite its belt tightening, Woodward residents will likely feel little, if any of the effects of the squeeze.

Because of a fairly robust city reserve account, a concerted effort by departmental leaders in reducing capital outlay requests and requests for operations dollars, there will be little if any change to city operations and no layoffs this year, Haines said.

"We will have to dip into reserves to keep us going," Haines said. "But if you don't want to dip, you are looking at layoffs and furloughs."

Since 2010, Woodward has seen increases in sale tax revenue in the double digits, Haines said.

But in the last year and a half, Haines began to notice a downturn. Then, a slow down in local drilling and a couple of businesses who packed up and followed the industry, spelled trouble, Haines said.

"The oilfield has dipped," Haines said. "Drilling has begun to move from our area to other areas and a couple of large businesses have closed up shop and followed that activity with their service companies."

As a result,  city employees will likely not see a cost of living wage increase and they might also have to pay a little more in insurance premium cost sharing, according to Woodward City Manager, Alan Riffel.

According to Riffel, a 25 percent increase in health care premiums charged to the city by the insurance company, coupled with the revenue downturn, is driving that possibility.

Last year, health insurance premiums ran the city $1.9 million. This year, the total increased to about $2.5 million, Riffel said.

At present, city officials are negotiating with several other companies to  secure affordable coverage for employees, but as of Tuesday evening, there remains a possibility that employees may have to carry more of the cost share for family and spousal coverage or perhaps pay a higher deductible, Riffel said.

At present, however, no changes have been made to employee health coverage and that is partly because a slight improvement in sales tax revenue over the last two months has inspired hope among city leaders.

"If we continue to see revenues rebound like we have in the last couple of months, that (revenue shortfall) can go away really quick,"  Haines said. "Hopefully that is what we will see."

According to Riffel, if that sales tax rebound continues, he pledged to come back  to the table and revisit wage increases.

In the meantime, departments were asked to reduce operations spending as well as putting on ice any capital outlay projects, Haines said.

Residents will likely see a slight utility rate increase in the coming year to two years, depending on the outcome of a rate study, Haines said.

In all though, budget proposals for most departments were by and large flat, with slight increases in projected needs for the water department as it increases its infrastructure to meet the needs of developing communities on the south end of Woodward.

There was also a large increase in capital outlay - by nearly $10 million from last year - primarily related to projects funded by dedicated taxes passed by voters.

City leaders also plan to perform a rate study to determine how it might begin to charge rates that at least make the utilities self supporting while not gouging the rate payer, Riffel said. At present, the city subsidizes utility shortfalls through fund reserves, according to Riffel.

And there are other challenges on the horizon for County E 911, said Director Shaun Barnett. According to Barnett, that department, usually funded by a fee (about $2) that is a part of your home phone service bill, is and has been struggling since fewer and fewer people have home phone service.

With only 50 cents coming in from cell phone users, the department is losing money month after month and is into reserves now, Barnett said.

According to Riffel, a rate increase on cell phone users to make up for the loss of the support for that vital service is a legislative issue. At present, the service is housed by the City of Woodward.

But for all its conservative projections, the city will continue to move forward with planned growth and promotion - especially in the area of attracting retail businesses, Haines said.

And residents here are likely to see continued activity in the coming weeks on the planned Woodward Fire Department Complex ($6,127,116) as well as the near completion of the Main Street, Street Scape project, Riffel said.

The softball complex will also be completed ($85,000 debt service), Haines said.

Plans to make improvements at the airport, such as the apron and apron lighting as well as plans for an overlay for the one of the runways out at the airport are also a go, Haines said.

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