The Cottonwood City Council unanimously approved the final budget for FY 2022 at a meeting July 6.
The anticipated general fund budget is set at $120,593,060, which is $44,945,985 more than the 2021 revised budget. The estimated revenue to go toward the general fund is set at a total of $47,611,920, $25,848,050 more than the 2021 estimated revenue but only $1,267,575 more than 2021’s actual 2021 revenues.
The budget is balanced, meaning that all expenditures have a revenue source ranging from everyday operating revenues, grants, outside financing for major projects as well as city reserves. Since potential grants and other outside funding sources are included in the budget, not everything in the budget may come to fruition in 2022, depending on how many of these grants it actually receives.
Kirsten Lennon, financial services director for the city, said it bases its budget off of revenue projections and desired grants, usually between 15 to 20 of them, so it can more accurately set its expenditure limitation and save itself from having to make budget adjustments for projects throughout the year.
“It’s easier than having to go back continuously and ask for budget adjustments from the council,” Lennon said. “If you already have it in your budget that you anticipate you’re going to get it, then it’s already been approved.”
The city anticipates receiving at least 75% of the grants it applies for most years.
The city also expects to receive $1.4 million in American Rescue Plan funding, which is budgeted under grant funds. Staff will determine which projects it would like to fund using the money during the year and will present ideas to council as needs come up. The funds must go toward things like water and wastewater infrastructure, broadband or lost revenues.
The FY 2022 budget is larger than the FY 2021 budget for a number of reasons. The city chose not to budget for any really big capital projects for 2021 due to COVID-19.
“We had cut back. We anticipated our revenues would be less. Everything was cut back to the bare minimum,” Lennon said.
Toward the end of the fiscal year, the city decided to approve nearly $21 million to deal with its unfunded pension liability and help pay for the public safety employee pension system, which is set to be paid back year over year for at least the next 10 years. The bond was rolled into the fiscal year 2022 budget to prevent staff from having to request a budget amendment from the council, which significantly increased the approved budget.
Additionally, the city increased its reserves from the recommended 16.67% to 25%, to help make up for how much was spent down out of the savings during the 2008 recession. The city will save 25% over 90 days for emergencies or unexpected expenses.
Mayor Tim Elinskisaid he’s grateful that the current council prioritized building the reserves.
“I just want to thank council too for really holding the line on bolstering our reserves,” he said. “I do worry what the years hold for us. I was here in the fat times years ago and then the recession. It was nice to know we had reserves then to make it through that, so I hope we continue to hold the line and make sure we’re well-positioned to weather another downturn.”
Now that the city is less concerned about being shut down by another spike in COVID-19, it has added more capital projects for FY 2022. One project is the rebuilding of Mingus Avenue for $2.7 million. The city also has plans to fund the preservation of pavement across the town for $750,000.
The city will also be purchasing a new ladder truck for $1.5 million for the fire department, finishing the kids park and putting money into the airport.
“Any time you want to see an increase in your budget you want it to be those types of projects,” Lennon said.
