The City of Delta is finalizing a budget for 2018 that maintains current services without any rate increases for water, trash, sewer or electrical service. But to keep the budget balanced, the city will have to dip into reserves. That scenario will likely carry on past 2018, meaning future councils will be facing some tough decisions.
The crux of the problem: although there is a modest increase in sales tax collections, revenues aren't keeping pace with the growing cost of providing services.
"Sales tax growth is consistently and significantly less than the growth in the cost of providing public services," city manager David Torgler said during a budget work session.
The city's 3 percent sales tax is split equally among the general fund; citywide capital improvement fund; and the parks, recreation and golf fund. Each percent of sales tax generates nearly $1.8 million.
Sales tax is currently trending about 2.6 percent above 2016 revenues. Severance tax and federal mineral lease fees are running 78 percent and 87 percent less, respectively, less than the 10-year median. Both reflect the closure of coal mines.
As a result, the city will have to tap into enterprise fund revenue to maintain existing city services. Transfers from municipal, light and power, sewer, water and trash funds total $705,000 in 2018. The golf course will receive $475,000; $230,000 will go to the general fund.
The number of city employees will not change in 2018, but has declined slightly over the past several years due to outsourcing of information technology, computerization and reduced need in the community development department. The number of full-time employees has dropped from a high of 95 in 2006 to 84 in 2017. The number of seasonal and part-time employees was not provided.
The 90-cent-an-hour increase in minimum wage that takes effect Jan. 1 will put additional pressure on the budget, particularly in the parks, recreation and golf department. To maintain a gap between the part-time and seasonal employees who are paid minimum wage, and those with more experience or responsibility, some
employees will receive a 62-cent-an-hour increase, plus the 3.1 cost-of-living increase that's going to all employees.
Also putting pressure on the parks, recreation and golf fund is voter approval of a ballot initiative to combine golf with parks and recreation. Torgler said the 1 percent sales tax that funds those departments is not enough to cover parks and recreation, much less golf. He commented on the parks and open space master plan that's nearing completion, noting consultants believe park maintenance is already underfunded by $100,000 annually.
The citywide capital improvement fund receives 1 percent of the city sales tax, as well as a portion of the county sales tax that's divided among municipalities. About 57 percent of that fund is committed to debt service for the alternate truck route; the remainder is spread among street improvements, sidewalk repairs, ADA upgrades, stormwater improvements and public facilities. In addition to its own facilities, the city owns the senior center, animal shelter and chamber building.
Aging infrastructure is a concern citywide. A specific need is a new HVAC system at city hall, but the estimated $480,000 replacement cost is not in the 2018 budget.
The general fund covers administration, police, finance, community development and public works.
"I'm okay with this budget, but the declining fund balances have to be addressed," said council member Bill Raley. "Living off fund balances is scary."
Council members agreed to future work sessions to discuss how the issue should be resolved -- through increased revenues, a reduction of services or a combination of both.
A public hearing on the 2018 budget will take place during the Nov. 21 council meeting. Final adoption will also take place at that meeting.