Cottonwood Financial Services Director Kirsten Lennon presented city staff’s proposed budget for fiscal year 2025 to the City Council during its meeting on Tuesday, May 7. The tentative budget, which sets the expenditure limitation, will be presented to council in June, followed by adoption of the final budget in July.
Lennon said the city’s main state shared revenues are income tax, sales tax, motor vehicle license tax and fuel tax. She estimated that sales tax, the majority of which comes from retail sales, will increase by 3% in the coming fiscal year.
Rental taxes will be phased out on Wednesday, Jan. 1, due to a change in state law, decreasing the city’s revenue by about $600,000. An increase in water rates approved in 2019 will also go into effect, and Lennon said that the city is planning a rate study to determine what future changes should be made to wastewater rates.
Lennon said that city staff try to reserve at least 16.67% of the prior year’s revenue in the following year’s budget as a 60-day backup, but they usually keep this figure at 25% to make sure they are covered. She added that the fund balance and reserves have been growing since the sales tax was increased by 0.5% several years ago.
The general fund supports most of the special revenue funds, such as the library and highway revenue funds, eight of which do not collect enough revenue to cover all of their expenditures.
The budget will include an internal transfer to the highway fund for a pavement and sidewalk project along Main Street. Lennon estimated that the library will receive about $111,000 from the county, with the remainder of its budget to be made up from the city’s general fund.
The overall budget is about $140 million, while Lennon estimated that actual expenses would be around $79 million. The budget is down 9% compared to last year’s adopted budget of $154 million. The largest increase is in the general fund, mostly for salaries and capital improvement projects.
The city will be spending around $27 million on salaries and benefits, with the budget including seven new positions and a 3.2% cost of living adjustment for employees.
In the capital budget, the two biggest items are the Main Street improvement project and water and wastewater projects.
Special Recall Election
The council unanimously approved a resolution to call a special recall election for councilwoman Lisa DuVernay, which will be held at the general election on Tuesday, Nov. 5.
Council had called two special meetings last week to set the election date for the Tuesday, July 30, primary election before the deadline for that election date expired.
DuVernay and Councilmen Michael Mathews, Derek Palosaari and Stephen DeWillis did not attend either meeting so council did not have a quorum to set the date for July, thus delaying the vote to November.
