About $3.3 million of the city of North Platte’s expected cash balance on Sept. 30 has been tagged for a formal cash reserve fund in its next annual budget.
Finance Director Dawn Miller outlined plans to meet the long-standing recommendation of the city’s auditing firm Tuesday as the City Council looked at preliminary 2021-22 budget figures.
After their nonvoting budget work session, council members gave final approval to two ordinances — including one meant to enable an east-side housing development — in disposing of the evening’s light regular agenda.
Information during the budget session was confined to expectations for the city’s general fund, which covers most essential services but accounts for just one-fifth of North Platte’s 2020-21 budget.
Total authorized spending for the fiscal year ending Sept. 30 totaled $146.8 million, with two-fifths covering Municipal Light & Water and the other two-fifths a variety of smaller funds.
Council members are encouraged to share their opinions on proposed spending before they hold a thorough budget work session in August, said Kibbon and Mayor Brandon Kelliher. Formal budget adoption is set for early September.
Miller said the city expects to have roughly $5.59 million on hand on Sept. 30, a combination of 2020-21 budget cuts, unexpectedly robust sales tax income and leftover cash from the end of the 2019-20 fiscal year.
Under the city’s longtime budgeting practice, all or most of that $5.59 million surplus would be held in the general fund’s contingency fund in case of emergencies like natural disasters, Miller and Kibbon said.
That approach made the extra money easier to access, but it also required the City Council to “appropriate” the contingency fund in every budget as though it were an actual spending item.
Accountants with Grand Island’s AMGL accounting firm have regularly urged the city to instead use a cash reserve fund, as Nebraska’s state government and most local governments do.
Though the cash reserve fund’s balance will still appear in the city’s annual budget legal notice, the council would have to amend the budget to tap it during the year, Miller and Kibbon said.
By setting aside $3.3 million as an initial cash reserve, general-fund spending in North Platte’s first 2021-22 budget draft would rise by 3.3%, from $31.59 million this year to $32.63 million next year.
Kibbon and Miller said the city would keep $1 million in the old contingency fund. The rest of the expected $5.59 million year-end balance would be held for possible pay raises for union and nonunion city employees, they said.
Council members held an executive session on collective bargaining negotiations during their regular meeting. No action was taken afterward, Kibbon said.
The draft 2021-22 budget would hold the city’s general fund property tax request steady at $4.47 million. It assumes $8.1 million in spending from sales taxes, the same as in 2019-20 but $150,000 higher than this year’s $7.95 million figure.
Fears that COVID-19 might slice into sales tax income led the council to count on less from that source for 2020-21. Net sales tax collections instead have soared to record levels, totaling $9.1 million from June 2020 through this May.
Miller said the proposed $3.3 million cash reserve would represent about 1½ months of next year’s expected general-fund spending. Kibbon suggested putting some of that into a separate reserve to save money for capital expenditures such as equipment purchases.
North Platte also will have about $2 million on hand from federal COVID-19 relief funds, he said. The 2021-22 budget would put that in a separate “grant fund” for the council to tap as it deems appropriate, Miller said.
During the regular meeting, the council gave 8-0 final approval to ordinances vacating a small part of North Eastman Avenue and granting R-3 residential zoning to the northern two-thirds of a tract at South Bicentennial and Philip avenues.
Former North Platte resident Daniel McKeon, who owns the 43.13-acre site, wants to build 100 or more single-family homes and duplexes. The land fronting Philip retains its current I-1 light industrial zoning. A final subdivision plan will come later.
Council members, who gave the rezoning ordinance 7-0 initial approval July 6, agreed 8-0 to waive the measure’s third and final reading.
The motion to adopt the ordinance immediately came from Councilman Ty Lucas, who typically urges the council to use that power sparingly so residents have more time to comment.
“I think the change in zoning (here) has been pretty well publicized,” Lucas said. “We have such a desperate need for housing, and I haven’t heard any opposition to this zoning change.”
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