City of Midland leaders predict more than $110 million in savings


For the second year in a row, Midland City Council members found they would end the fiscal year with more than $110 million in their fund balance or general fund savings account.

This brought up a discussion about how much is too hard to hold for a rainy day? The answer is unclear.

Midland’s new chief financial officer, Christy Weakland, told city leaders this week that she was comfortable having up to 75% or nine months of general fund spending on hand. The amount she said she would like in the reserves is around $80-90 million.

For decades, the town of Midland always had more than 35% reserves. With up to $115 million expected in reserves at the end of fiscal 2020, it was estimated that $52 million would be more in line with what is traditional for the city.

City officials said this week that the 35% has given the city of Midland better bond ratings and provided a good cushion so far. Weakland said after talking to others in positions in government finance, having more would help Midland during less stable economic times.

What has been decided by city leaders is that the city is prepared to spend over $20 million on one-time capital improvements to bring the fund balance down to at least $90 million.

These improvements include $4.5 million for police department projects, including improvements to the aging downtown headquarters building and a police training center.

City officials also plan to spend $14.5 million on road improvements (Wadley Avenue extension in West Midland, Avalon’s Briarwood widening east of State Highway 158 and the right-of-way and design to update Mockingbird Lane).

Additional requests from the service include $1.072 million for community services and $1 million for the fire service.

City officials said sales tax excesses and other revenue increases were behind the sales tax hike. An increase in 2020 and 2021, when the fund balance grew from $90 million to approximately $118 million, was largely due to increased oil and gas revenues and a large CARES grant from the government.

Until a budget ordinance is passed in mid-September, city leaders will discuss how much they want to see in reserves. If 35% was the number, then executives would be looking for an additional $40 million in projects and one-time expenses.

City leaders said they really don’t want to use the savings to help pay for this year’s budget, which is more than $10 million more than last year, because those expenses are ongoing.

However, Scott Dufford, who has served on the board since 2001, will argue for 35%. It is “inadmissible” to have more than that.

“We’re going to invest it,” Dufford said.

Lori Blong told the Reporter-Telegram that she would like to keep the fund balance “just over 35%”. She said coming out of a “black swan event” with the COVID pandemic and negative oil prices, the city needs to be careful. She also said city leaders should “store more dollars than necessary” or move to a place where the fund balance is “overweight.”

General fund over the years

2012: $49.9 million

2013: $45.2 million

2014: $40.3 million

2015: $47.8 million

2016: $41.4 million

2017: $57.1 million

2018: $60.3 million

2019: $84.1 million

2020: $89.9 million

2021: $118.8 million

2022: $114 or $115 million*

*indicates an estimate

Source link


Comments are closed.